As I’ve talked about a number of times, one of things I like to keep an eye on is the 300 Consistency in USDA’s corn stocks estimates. No, I’m not talking about a movie about the Spartans, they of the painted on ab muscles, but rather USDA’s tendency overstate/understate US corn stocks by an average of roughly 300 mb. This played out again in the July round of Supply and Demand reports, with USDA’s old-crop 2020-2021 estimates resulting in a bottom line of 1.082 bb, down 25 mb from the June guess due to a like increase in feed demand. However, based on my end of June analysis of the cmdty National Corn Price Index (NCPI, weighted national average cash price) and the correlating stocks-to-use figure, I then use the Unknown Variable Solution to calculate a rough idea of total demand and supplies. Clear as mud, right?

Take a look at the attached table and note the differences in ending stocks calculations for the previous 4 marketing years:

  • 2016-2017
    • DNAI ~ 1.943 bb
    • USDA = 2.293 bb
    • Difference = (-350) mb
  • 2017-2018
    • DNAI ~ 2.240 bb
    • USDA = 2.140 bb
    • Difference = 100 mb
  • 2018-2019
    • NAI ~ 1.821 bb
    • USDA = 2.221 bb
    • Difference = (-400) mb
  • 2019-2020
    • NAI ~ 1.919 bb
    • USDA = 1.991 bb
    • Difference = (-72) mb

Which leads us to the latest 2020-2021 calculations through the end of June.

  • 2020-2021
    • NAI ~ 1.360 bb
    • USDA = 1.082 bb
    • Difference = 278 mb

The idea USDA is understating US stocks this time around fits with the structure of the corn market:

  • Dec Corn remains in a secondary (intermediate-term) seasonal downtrend
    • Driven by noncommercial long-liquidation
    • And light commercial selling indicated by the strengthening carry in futures spreads
  • However, the long-term commercial view remains bullish
    • With the Dec21-to-July22 forward curve showing a carry of 13.75 cents and covering roughly 22% calculated full commercial carry (cfcc)
      • 33% or less cfcc is considered bullish

The conclusion is USDA only has two more monthly supply and demand reports to correct itself, then the next Quarterly Stocks report released on September 30 for stocks-on-hand as of September 1, the de facto ending stocks figure. I’m not holding my breath USDA will work too hard to get back its make-believe numbers back in line with reality.