NAPERVILLE — The often unpredictable nature of quarterly U.S. corn and soybean stocks has created huge market volatility in recent years, but the trade in the latest marketing year has been on an uncanny streak of closely pegging the numbers.
The performance has been particularly strong on corn despite a large, perhaps overlooked correction to the prior quarter’s figures in the most recent government stocks report.
The market will hope to keep the streak alive on Friday when the U.S. Department of Agriculture’s statistics branch publishes the Sept. 1 data at noon EDT (1600 GMT). Those numbers are effectively the 2021-22 U.S. corn and soybean ending stocks.
On average, analysts peg Sept. 1 U.S. corn stocks at 1.512 billion bushels, up 22% on the year but otherwise an eight-year low. Soybeans are seen at 242 million bushels, down 6% on the year and the lowest Sept. 1 supply since 2016.
That compares with 2021-22 ending stock estimates of 1.525 billion and 240 million bushels for corn and soybeans, respectively, from USDA’s World Board earlier this month. The surveyed Sept. 1 stock number rarely lands that close to prior ending stock estimates, so at least some mild surprise is possible.
The trade did remarkably well anticipating corn and soybean stocks in the previous three quarters. Analysts’ guesses in those three quarters deviated an average of just 0.3% from actual, easily their best for that period since 2005-06 and well below the five-year average of 2%.
For soybeans, they missed by an average of 0.9% in the last three stock reports, their best in at least 17 years and better than the recent average of 1.6% for those reports. The trade has underestimated quarterly soybean stocks in the latest four reports.
Analysts nailed June 1 corn stocks this year, potentially causing an oversight of a near 100 million-bushel reduction to the March 1 corn figure, the third-largest such adjustment in recent memory.
Prior corn stock adjustments were large throughout 2020 after USDA presumably overestimated the 2019 harvest, though the changes became nearly negligible again in 2021. Large moves in prior corn stocks have led to big market misses, so this is something to watch out for on Friday.
Analysts’ biases on Sept. 1 corn and soybean stocks have been mixed over the last decade or so. They severely underestimated soybeans in 2021, and they way overcooked corn predictions in both 2019 and 2020 (perhaps foretelling the corrections to come).
But they may be more likely to lowball Sept. 1 corn stocks when prices are high, i.e. when stocks-to-use is historically tight. Analysts’ Sept. 1 estimates were too low in four of the last five cycles when U.S. corn stocks-to-use was below 10%, the only outlier being 2011-12.
USDA also seemingly holds the same bias of overestimating corn use when supplies are tight. Sept. 1 corn stocks in the same four years referenced above came in higher than the World Board’s September projection of ending stocks with 2011-12 again the only outlier.
Although it has fluctuated more in the most recent years, U.S. soybean stocks-to-use has not varied enough over the longer term to connect trade biases with low stocks-to-use. However, Sept. 1 stocks were lower than expected in three of the four heaviest supply years, as lower prices may have spurred more demand.
The World Board’s latest estimates imply 2021-22 U.S. corn and soybean stocks-to-use at 10.3% and 5.4%, respectively. For corn that would be the second-lowest of the last eight years and soybeans the lowest in six years.
Quarterly U.S. stock reports are known to jolt futures markets, though the Sept. 1 edition is historically the least exciting of the four. That is likely due to the distractions of U.S. acres in both March and June and final U.S. production in January (when Dec. 1 stocks are published).
Price action was relatively quiet in pre-report trade on Thursday. Chicago-traded December corn and November soybean futures are both at 10-year highs for the date and second-best for the time of year after 2012. Karen Braun is a market analyst for Reuters. Views expressed above are her own.
(Editing by Matthew Lewis)