Was last year's record US corn yield even bigger than has been reported?
US officials may have underestimated last year's domestic corn production - but overstated soybean output - investors said, as they dissected inventory data which sent corn futures plunging.
The US Department of Agriculture stunned markets on Tuesday when, in long-awaited data on grain inventories, it pegged domestic corn inventories at at 7.75bn bushels, some 130m bushels more than investors had expected.
The data, which sent corn futures plunging 5%, on the face of it suggest that corn consumption has been lower than expected, with volumes used in livestock feed the most likely source of disappointment, given that export and ethanol markets are closely monitored.
Societe Generale said that the data "could suggest that US feed demand has not recovered as quickly as we are currently expecting, despite expansion in the hog and poultry sectors".
Rabobank said that the report "suggests that USDA might lower its feed/residual use for 2014-15" when the department next week unveils its monthly Wasde crop report.
However, some brokers believe that the unexpectedly high US corn inventories, in the face of data last week showing 7% expansion in the US hog herd, may reflect higher supplies than thought to begin with, rather than disappointing use.
"In order to have such a large stocks number, could the USDA be telling us they have underestimated the production for 2014-15?" asked Paul Georgy at Chicago-based broker Allendale.
At Country Futures, Darrell Holaday said: "We feel this [stocks report] is affirmation that USDA underestimated last year's corn crop.
"Clearly, USDA underestimated last year's corn crop."
Meanwhile, for soybeans - in which the USDA estimated inventories domestic inventories on March 1 at 1.33bn bushels, some 18m bushels below forecasts - the unexpectedly figure could be down to last year's harvest having been overestimated, New York-based Jefferies said.
The broker said the data suggested that last year's harvest may have been "overstated" by about 56m bushels, using analysis of the so-called "residual" element in USDA balance sheets.
The residual category is a somewhat amorphous factor which if dipping in minus territory can indicate a production understatement, as seen in 2013-14, and if positive may signal that output has been overegged.
The result may be a cut in last year's crop to "about 3,913m bushels - still a record, but giving… the USDA a carryover closer to 330m-355m bushels" for soybeans for 2014-15.
The USDA currently pegs carryout stocks, an important influence on price potential, at 385m bushels.
By Mike Verdin