Surprises in the USDA grain and soybean inventory survey in Sept 2013
The USDA's stock assessment at the beginning of September, which is eagerly awaited every year, once again provided a big surprise. Initially, grain and soybean stocks were found to be 12% (wheat) to 17% (corn and soybeans) lower than at the same time last year.
However, anyone who concludes from this that initial supplies are weaker and prices should rise is wrong. The decisive factor is the quantities expected from market circles before the official inventory, which have been the inspiration for the price development to date. Afterwards, the situation is exactly the opposite. The USDA data are considerably higher than expected. In the case of corn, USDA estimates are 20% higher and for soybeans 16.5% higher than the average of the expectations expressed. Wheat as a whole is lower, but the individual types of wheat are partially offsetting each other. Soft red winter wheat, which is traded in Chicago, is making the difference
The reaction on the stock markets initially reflected the superficially conflicting assessments. After initial price gains, the tide turned and there were some significant price losses. Maize prices fell by the equivalent of € 0.5 per tonne, wheat returned to its starting value after a high, and soybean meal fell by € 1.47 per tonne.
Market experts see the reasons for the differences in stocks in the late harvest dates this year. In the previous year, quantities from the new harvest were already counted. In the current year, the new harvest had not even begun on the survey date. The reduction in wheat stocks seems plausible because some of the wheat was fed in place of missing new maize. As expected, the largest differences occurred in the storage quantities on the farms. These quantities are the largest component of uncertainty because the harvest and consumption assessments for own use are not carried out accurately. This is different for exports, bioethanol production or compound feed production, as the quantities determined form the basis for the sales and purchase prices.
