What is in this article?:
- Corn, soybean supplies to be tight for another year
- Food price inflation?
• The corn projection represents 5.5 percent of projected marketing year consumption. Stocks as a percent of consumption would be the smallest since the record low 5 percent of 1995-96. And 5 percent is considered to be a minimal pipeline supply
Food price inflation?
“Strong U.S. and world crop demand, scattered production problems in 2010 and early 2011, and prospects for generally tight stocks have pushed corn and soybean prices high enough to raise concerns about more rapid food price inflation,” Good said.
The question now is whether the year ahead will bring some change in the tight supply/high-price scenario. Much of the attention will be on the prospective size of the 2011 U.S. corn and soybean crops and the level of demand for those crops.
“First, we look at corn demand prospects for the 2011-12 marketing year. There is likely to be some further weakness in domestic feed demand resulting from current high feed costs and further liquidation of livestock numbers,” he said.
Export demand is more difficult to anticipate due to the uncertainty of world grain production, the pace of economic growth, and trade policy. Demand at the same level as this year may be the best forecast.
“The level of use of corn for ethanol production may be the most important factor. Use during the current marketing year is expected to be well above the level required to meet renewable fuel mandates. The mandates for 2011 and 2012 would require about 4.7 billion bushels of corn to be used for ethanol production during the 2011-12 marketing year, or 200 million bushels less than is expected to be used this year. Use could exceed the mandate again next year if blending economics remain favorable. Corn consumption in 2011-12 could decline by 100 to 300 million bushels from the projected level for this year,” Good added.
A decline of 200 million bushels would put total corn consumption at 13.23 billion bushels in 2011-12. With a trend yield of 159 bushels in 2011, harvested acreage would need to total 83.2 million acres to produce 12.23 billion bushels of corn. Planted acreage would need to be near 90.3 million, 2.1 million more than planted in 2010, he said.
“If demand is stronger than expected and/or stock rebuilding is to begin, and if there needs to be some allowance for yield risk, planted acreage may need to be in the range of 92 to 93 million acres,” he said.
According to Good, demand for U.S. soybeans in 2011-12 is likely to remain strong due to a modest production shortfall in Argentina this year and continued strong Chinese demand.
If consumption remains near 3.35 billion bushels and the 2011 U.S. average yield is near the trend value of 43.2 bushels, harvested acreage will need to total about 77.5 million acres to maintain pipeline supplies at the end of the 2011-12 marketing year. Planted acreage would need to be near 78.5 million, 1.1 million more than planted in 2010.
To allow some modest rebuilding of stocks and to allow for yield risk, planted acreage may need to be near 79.5 million. Additional double cropping will help meet the need.
“It appears that combined acreage of corn and soybeans needs to increase about 6.5 million acres in 2011 to allow for some modest rebuilding of U.S. inventories. A smaller increase would require above-trend yields to avoid another year of very tight supplies,” he said.