Monday, May 12, 2008

Grain Inventory Levels Continue to Decline


Old crop ending stocks were pegged at 1.383 billion bushels compared to 1.283 billion bushels last month. However, for the 2008/09 season, ending stocks were dropped to just 763 million bushels. Beginning stocks were revised higher by 100 million bushels for 2008/09 due to a decline in ethanol demand to 3.0 billion bushels for the current season, but ethanol demand is expected to jump to 4.0 billion next year. The USDA also assumes a 400 million bushel decline in corn exports for the coming season and an 850 million bushel decline in feed usage. World corn ending stocks for the 2007/08 season were pegged at 109.69 million tonnes vs. 102.97 million tonnes last month. New crop (2008/09) ending stocks were pegged at just 99.03 million tonnes, and the 10 million tonne drawdown in ending stocks drives the world corn stocks/usage to just 12.6%. This is the lowest world ending stocks since 1983 and the lowest stocks/usage ratio since 1973.


Analysts indicate that the outlook for new crop soybeans is now much tighter than previously estimated due to slightly higher projected usage by the USDA. This leaves little room for a below average yield this season. The Supply and Demand Report pegged US old crop soybean ending stocks at just 145 million bushels compared to 160 million bushels on last month's report. Exports were pegged at 1.09 billion bushels compared to 1.075 billion bushels last month. Crush was unchanged compared to 1.84 billion bushels last month. For the new crop season, ending stocks are pegged at just 185 million bushels which is about 100 million below trade expectations. Total new crop demand (2008/09) was raised to 3.073 billion bushels from 3.024 billion for the 2007/08 season. Many traders had been expecting a drop in demand due to high prices. Oil ending stocks for 2008/09 were pegged at 2.679 billion pounds compared to 2.792 billion pounds this season.

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