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Thursday, May 10, 2012

Fasten Your Seatbelt For Today’s USDA Corn Production Forecast


USDA blew the cobwebs off its calculators and forecast a 14.8 billion bushel corn crop for 2012, helped by a 5.1 million acre increase in corn and a record 166 bushel yield average.  With increased demand for corn all around, there will still be a 1.9 billion bushel carryout at the end of the marketing year in August 2013.  For the new crop total use will be up 9% from the old crop, based on higher use for feed and exports, along with sweeteners and starches.  Corn used for ethanol is expected to remain flat.  Even with the nearly 2 billion bushel carryout, USDA is forecasting the season average price from $4.20 to $5 per bushel, but that is down sharply from the $6.10 expected for the current crop.  Specifically, feed use is forecast at 5.450 billion, ethanol at 5.0 billion, exports at 1.9 billion, and ending stocks at 1.881 billion.  Compared to the old crop, total use is projected more than 1.1 billion bushels higher.

For the old crop, ending stocks were pushed higher by USDA to 851 million bushels because of slower use in feed and residual, along with the expected increased use of wheat for livestock feeding.  Additionally, there will be increased corn availability at the end of the current marketing year because of the early planting and expected early harvest of the new crop.  USDA says that will displace old crop usage and boost carryout.  Specifically, feed use from the old crop is estimated at 4.55 billion, ethanol at 5.0 billion, and exports at 1.7 billion, with the 851 million carryout.

Globally, corn production for 2012-13 is projected to increase by 75 million tons, setting a record for production for the 6th consecutive year.  Compared to the expected 946 million ton production, consumption is forecast at 921 million tons.  That leaves global ending stocks at the highest level in more than a decade.

USDA forecast new crop soybean production at 3.205 billion bushels, up 200 million from last year because of higher yields in the face of lower planted acreage.  The soybean yield was forecast at 43.9 bushels up 2.4 bushels per acre from last year.  The crush was projected at 1.655 billion bushels, about the same as the current marketing year, but exports are forecast at 1.505 billion up 190 million from the current year to fill the shortfall from South American production.  Total soybean use is projected at 3.285 billion, compared to 3.076 for the current crop.  USDA placed ending stocks at 145 million bushels, down 65 million from the current year, and said the season average price would range from $12 to $14 per bushel. 

Globally, soybean production is expected to increase by 15%, spurred by higher prices and a yield rebound that will result in more acreage in South America for the crop to be planted later this year.  USDA expects record crops in both Argentina and Brazil.  China is expected to import about 61 million tons, up 5 million from the current year.

In the May crop production report, USDA forecast winter wheat production at 1.693 billion bushels.  That includes 1.032 billion for hard red winter wheat, 428 million for soft red winter wheat, 14 million for white wheat, and 219 million for soft white wheat.  That is up from 1.493 billion a year ago, helped by a 111 million bushel increase in the Kansas wheat production, and an 84 million bushel increase for Oklahoma.  Percentage-wise, total production is up 13%, area to be harvested is up 10%.  The average yield was placed at 47.6 bushels, up 1.4 bushels from 2011.

Posted by Stu Ellis on 05/10 at 10:12 AM | Permalink


Digging Deep for Five Bullish Reason for New Crop Corn and Why They may not be so: -Harvested corn acres have a chance of being 500 thousand acres too high. The projected low price new crop and the high price of old corn may have more corn acres harvested as silage than what might be implied in the report. The large increase in planted acres may be an addition factor, when looking for lower harvested acres. One would speculate that some of those acres might be planted in more marginal ground and will not be harvested. These arguments could be “wiped out” by a bigger June plantings report. -The US accounts for most if not all the increase in World’s new corn crop ending stocks. Should a production problem occur in other countries, the US stands a good chance of increasing export above those projected. The balance sheet has already increased exports by 200 million bushels from the last marketing year. -The balance sheet is also dependent upon a BIG Brazilian safrinha corn crop. This crop has a history of disappointing its growers, although things currently seem good. -The 166 bushel per acre US corn yield is in the upper 30% of our projections. The quick planting pace may justify this yield level. The high yield may drop with increased acres, in the yet to be seen June report. Production could be maintained or increased from current levels with more acres even with a lower yield. -The corn feed and residual numbers within and between the old and new crop still look and feel “funny”. This results in an “uneasy” feeling in the ending stocks. My interpretation of this number has not been a “winner” in the resent past. Jib aka Gibberish

Posted by: Jib at May 10, 2012 3:03PM

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