Wheat Stocks Building, But Not Corn and Soybeans

Implications: Less than normal quarterly use of wheat builds US ending stocks however record quarterly use of US soybean and corn is expected to continue to keep at the knifes edge.

Analysis:     Corn Quarterly Stocks: USDA estimates June 1 Corn stocks on and off farm at 4.028 billion bushels vs 3.533 billion a year earlier. However such stocks levels implies 3rd quarter record usage of 2.831 billion bu. USDA official March 31st release was 3.419 billion bu use. The three year average third quarter use has been 2.532 billion bushels and five year average use of 2.409 billion bushels. One year ago usage for the third quarter was 2.535 billion bushels.   
    Corn Fundamentals: USDA's acreage and quarterly stocks suggest a fall in end stocks from 1.433 billion bushels for the 2007/08 market year to Allendale's estimate of 568 million bushels for the 2008/09 market year.   
    Soybean Quarterly Stocks: USDA estimates June 1 Soybean stocks on and off farm at 676 million bushels vs 1.092 billion a year earlier. Allendale third quarter soybean stocks estimate implies record usage of 758 million bushels. USDA official March 31st release was 904 million bu use. The three year average third quarter use has been 685 million bushels and five year average use of 630 million bushels. One year ago usage for the third quarter was 695 million bushels.
    Soybean Fundamentals: even though USDA's present acreage may suggest end stocks of 106 million bushels, Allendale estimates 2008/09 end stocks of 66 million bushels under average summer growing conditions. Present soybean crop conditions are 5% less than the five year average. The two most sensitive topics for future direction of futures is likely to be confined to weather forecast and the ongoing Argentina strike. Record third quarter use for US soybeans only emphasizes how beneficial the Argentina strike has been for world demand for US old crop soybeans.
    Wheat Quarterly Stocks: USDA estimates June 1 Wheat stocks on and off farm at 306 million bushels vs 456 million a year earlier. Allendale's fourth quarter wheat stocks est is implying usage of 404 million bushels, USDA's, March 31st implied third quarter use of 422 million bushels. The 404 million bushels of fourth quarter use compares to a five year average usage is 427 million bushels and three year average of 415 million bushels. One year earlier usage was 401 million bushels.   
    Wheat Fundamentals: USDA threw the wheat futures a curve in its acreage and stocks data on Monday, June 30th. Although USDA did reduce planted acres for all wheat vs its June 11th estimate it did increase harvested acres and less than expected fourth quarter use. Less quarterly use implies beginning stocks of 306 million bushels vs its June 11th estimate of 254 million. Projected 2008/09 end stocks are now estimated at 552 million bushels vs its June 11th estimate of 487 million bushels. This adjusted end stocks level of 552million bushels would be the highest since 2005's 571 million bushels.