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(September 29, 1997) CORN: As an interim step between the September and October Crop Production reports, the market will be focusing on Tuesday's release of the USDA's September 1 Stocks in All Positions report. A quarterly survey, the September report is not as illuminating as the other three throughout the year because it reports stocks on the date that matches the end of the crop year. The USDA just estimated the ending stocks for the 1996/97 crop year (which is essentially the same as the September 1 stocks figure) in the September Crop report at 941 million bushels, more than double, the year-earlier level of 426 million. Although the September Stocks report may seem to hold the potential for no surprises, it is not unheard of to make adjustments in the September 1 figure as compared with the ending stocks figure reported at mid-month. Indeed, the average trade guess is 933 million bushels, with a trade range of 888 million to 1,001 million.
The other three Stocks reports generate more market interest because they provide solid clues as to how much corn was consumed in that quarter. Unlike the soybean market, which tracks usage via the weekly crush report from the National Oilseed Processors Association, the corn market has only the quarterly Stocks report as a regular measure of domestic consumption, which is typically four times the size of corn exports. (Exports for both corn and beans are easily measured through export inspections, export shipments and the monthly Census report.)
One of the most debated issues in determining the September 1 stocks level is last season's actual exports. The USDA projects total export demand in 1996/97 at 1,800 million bushels. However, according to weekly export inspection figures, corn exports totaled just 1,750 million. The problem is that Congress has mandated that the USDA use monthly Census figures, not export inspections of shipments, to determine the official export figure. (The Census Bureau releases its official number about 45 days after a month's end, so export inspections are used as a proxy for the last month of the quarter. Also, export inspections are used rather than export shipments because export shipments do not include donations, which can be sizable in some years.) Census data from September 1996 through July 1997 along with export inspections for August produces an export figure that is very close to the USDA's estimate of 1,800 million bushels. Thus, we anticipate just a slight 5-million-bushel upward revision in the September 1 Stocks report from the USDA's Supply/Demand report released earlier this month.
Tom Levis
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