Quarterly stocks came in tighter than expected in last Thursday's report, with USDA reporting stocks of 8.347 billion bushels, which was below the Bloomberg average estimate at 8.445 billion bushels and below all but one analyst estimate. Most of the difference stems from feed use coming in higher that most estimates. Feed use through the first two quarters of the year warrants an increase in next month’s WASDE report.
Our analysis indicates that USDA is well behind the curve and has kicked the can down the road in previous reports, but it is now apparent that USDA needs to increase their feed use estimate from current levels. When paired with a warranted increase in exports and ethanol as well, the balance sheet could see adjustments of well north of 100 million bushels in the upcoming WASDE. That could prove quite supportive in the medium-term outlook for the corn market, especially if exports continue at their recent solid pace.
