• A 5 percent stocks-to-use ratio is still historically low.
• That represents just 18 days of supply, so we’re still going to need a big 2011 corn crop because we don’t expect any drop in total use this year.
Farmers and ranchers examining the April World Agricultural Supply and Demand Estimates (WASDE) released April 8 by the Agriculture Department were expecting a slight reduction in the corn supply from last month due to increasing use for ethanol, but USDA pegged the corn supply at 5 percent of total usage, the same as the March report.
“A 5 percent stocks-to-use ratio is still historically low,” explained Todd Davis, crops economist with the American Farm Bureau Federation. “That represents just 18 days of supply, so we’re still going to need a big 2011 corn crop because we don’t expect any drop in total use this year.
“USDA released its March prospective plantings report showing farmers intend to plant 92.2 million acres of corn this year, which would be the second largest corn acreage since 1944. This shows that farmers are going to step up to the plate and produce the corn the market is calling for. The market needs corn this year and farmers will deliver.”
Davis said a big corn crop is required to build supplies and to meet growing demand for ethanol, feed and other uses.
“We can’t afford a short crop this year,” Davis said. “We need big yields and strong production in all growing regions.”
In the April WASDE report, USDA lowered its estimated feed/residual use by 50 million bushels, which was offset by a 50-million bushel increase in corn used for ethanol. That fact explains the unchanged 5-percent stocks level, according to Davis. The April WASDE pegs corn ending stocks for the 2010/2011 marketing year at 675 million bushels, the same as in March.
“Today’s WASDE confirms that corn supply and use is still very tight,” Davis said. “We’re also seeing tight cotton supplies, which means we’re also going to need a big cotton crop this year. We are going to be seeing a lot of interplay between the various crops this year. Production changes in one commodity will impact prices of the other commodities, so we’re going to need cooperative weather all across the country to meet strong demand for cotton, corn and wheat.”