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The report on stocks, to be released on June 30, will show the
level of inventory on June 1, said Darrel Good. "For soybeans,
the magnitude of crush and exports during the
March-through-May-2006 period is pretty well known," he said.
"The June 1 estimate of stocks allows for the calculation of
seed, feed and residual use of soybeans during that quarter and
provides a benchmark for evaluating the accuracy of the
estimated size of the 2005 crop.
"An unusually large or small residual use for the quarter may
indicate an error in that crop estimate. However, since the
calculated level of seed, feed and residual use during any
particular quarter varies significantly from year to year, an
extremely large deviation from expected value would be required
to suggest an error in the production estimate."
The Census Bureau estimates the domestic soybean crush in
March, April and May 2006 at 431.3 million bushels, very near
the level during the previous year. Census Bureau estimates of
U.S. soybean exports are available for March and April but will
not be available for May until early July.
From September 2005 through April 2006, the Census Bureau
estimates of U.S. soybean exports were nearly identical to the
USDA estimates. Using the USDA estimates for May, exports during
the quarter are estimated at 178.2 million bushels, 33 million
less than exported during the same quarter last year.
Over the past five years, Good noted, the calculated level of
seed, feed and residual use of soybeans during the March-to-May
period ranged from 6.3 million to 69.5 million bushels,
averaging 40.5 million bushels. For the first half of the
2005-06 marketing year, seed, feed and residual use of soybeans
totaled 173.6 million bushels, about equal to the average of the
past five years.
"If third-quarter use this year is near the five-year average
of 40.5 million bushels, total use during the quarter should
have been near 650 million bushels, leaving June 1 stocks near
1.02 billion bushels," said Good. "Stocks on June 1, 2005,
totaled 699.3 million bushels, and the record June 1 inventory
was 848.9 million in 1986. That record was nearly equaled --
848.6 million -- in 1999."
Good said it is more difficult to anticipate the magnitude of
the estimate of June 1 corn inventories.
"Estimating quarterly exports is straightforward, but less
information is available for the other two categories: seed,
feed and residual uses; and processing uses," he said.
Monthly Census Bureau estimates of U.S. corn exports are
available through April 2006, and weekly estimates are available
from USDA for the entire March-through-May quarter.
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 From September 2005 through April 2006, cumulative Census Bureau
estimates of U.S. corn exports were about 7 million bushels, or 0.5
percent, larger than USDA export estimates. The difference between
the two estimates has been unusually small so far in the 2005-06
marketing year, Good noted.
"Based on USDA export estimates for May, exports for the entire
quarter are estimated at 570 million bushels, 143 million larger
than exports during the same quarter last year and the largest for
that quarter in 10 years," said Good.
Estimates of seed, food and industrial use of corn require input
from several industry sources, and that data is not easily
accessible by the public.
"The approach I take is to answer the question, 'If the USDA
projection of use for the year is correct, what amount should have
been used during the March through May period?" said Good. "For the
year, the USDA projects corn used for all seed, food and industrial
purposes at 2.985 billion bushels, 11.1 percent more than used last
year.
"Use during the first half of the year totaled 1.405 billion
bushels, 9.8 percent more than used a year earlier. To be on track
with the USDA projection, use should have accelerated during the
third quarter, to perhaps 785 million bushels, a 12 percent increase
from the use of a year earlier."
A similar approach, he added, is taken in anticipating feed and
residual use. Feed and residual use for any time period is not
measured, but is calculated as a residual, the difference between
total apparent use and use for exports and processing.
Feed and residual use during the first three quarters of the
years since 1996-97, a period of generally abundant corn supplies,
ranged from 82.8 percent to 85.5 percent of the total for the year,
averaging 84.2 percent.
"Assuming USDA's projection of use for the current year is
correct at 6 billion bushels, one might expect use during the first
three quarters to be 5.052 billion bushels, resulting in a
third-quarter estimate of 1.168 billion bushels," said Good.
"Based on this approach, corn use during the March-through-May
quarter should have been near 2.523 billion bushels, leaving June 1
stocks near 4.465 billion bushels. A large difference between this
calculation and the actual stocks estimate would point to a revision
in the projected level of domestic use during the current marketing
year."
[University
of Illinois College of Agricultural, Consumer and Environmental
Sciences news release]
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