By Karen Braun
NAPERVILLE, Illinois, March 29 (Reuters) – U.S. soybean supplies have been through a wide variety of scenarios over the past several years, including record-high stocks, thinner stocks, bumper crops and meager crops.
But one thing has been constant for six consecutive years now: analysts have underestimated U.S. soybean stocks as of March 1, the midway point of the marketing year.
It is unclear why this bias has developed as soybean use is usually more transparent than that for corn, for example. However, there is evidence to suggest the streak might not extend to seven this year.
On average, industry analysts predict U.S. soybean stocks as of March 1 totaled 1.742 billion bushels, down 10% on the year and a two-year low. The U.S. Department of Agriculture’s statistics branch will publish this survey-based figure on Friday along with planting projections.
Demand data is not yet official for the full period, though combined crush and exports for December-February (Q2) probably landed about 5% below the same period two years ago, which was record-high.
But the trade’s soy stock estimates imply Q2 use about 7.5% below two years ago. Additionally, Q2 soybean demand was about 11% better than a year ago though estimates suggest it was only 6% better.
It is possible some analysts overlooked how anomalous Q2 exports were. January and February soy exports may have combined for a new record, rising more than 30% above average. Industry figures suggest Q2 soybean crush was a three-year low but only 2% below last year’s record.
Individual trade guesses may suggest anticipation of a lighter March 1 soy number. Of the 21 analysts in the Reuters poll, only one-third had an estimate higher than the collective average.
Despite indications that the trade could be over-cooking soy stocks for Friday, it is hard to ignore the six-year underestimation streak that persisted amid a full spectrum of market conditions.
Trade biases on Dec. 1 soy stocks do not necessarily foretell March 1 biases, but it is noteworthy that analysts this year broke a four-year streak of underestimating Dec. 1 stocks.
Even if the trade guess is off, it is unlikely that soy stocks would be a complete shocker as the March 1 number has not fallen outside the trade range of guesses since 2013, when stocks came in high.
The only two times in the last decade where March 1 soybean stocks landed below the average trade guess were in 2015 and 2016.
CORN, WHEAT
March 1 corn stocks have come in below trade estimates for the past three years, though last year’s result was very close to expectations. In the five years before that, ending with 2019, March 1 corn stocks ended up heavier than predicted.
On average, analysts peg March 1 corn stocks at 7.47 billion bushels, down 4% on the year and the smallest for the date in nine years. That suggests Q2 disappearance down 14% from last year’s high to a four-year low.
March 1 marks the end of the third quarter for U.S. wheat, and analysts see stocks at 934 million bushels, down 9% from last year and the date’s lightest in 15 years. March 1 wheat stocks have flipped between bearish and bullish outcomes for the last few years.
March stock surprises have not been common for corn or wheat, though corn landed slightly above the range of trade estimates in 2018, and the time before that was in 2013, which was a very bearish result. March 1 wheat stocks last landed outside the trade range in 2008, and that also featured an extremely bearish number.
Karen Braun is a market analyst for Reuters. Views expressed above are her own.
Graphic- Trade biases for March 1 U.S. soy stocks
(Writing by Karen Braun Editing by Matthew Lewis)
((karen.braun@thomsonreuters.com; Twitter: @kannbwx))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
