What is in this article?:
• Prospects for high net returns and crop insurance revenue coverage support combined 2013 area for wheat, corn, and soybeans very near last year’s 30-year high.
World wheat production
World wheat production is expected to recover significantly from last year with all major exporting countries except the United States expected to have larger crops. Kazakhstan, EU-27, Russia, and Ukraine account for the majority of the increase.
High wheat prices spurred additional planting in Northern Hemisphere winter wheat producing countries and are also favoring increased spring plantings in Canada, as well as higher acreage in Argentina and Australia.
As a whole, major exporter beginning stocks are the tightest since 2008/09. The United States accounts for a significant portion of those stocks and is in an advantageous position to boost exports for the first few months of the marketing year as new-crop wheat becomes available.
Competition is expected to strengthen, however, as other Northern Hemisphere new-crop supplies reach global markets. Despite near-record production projections, exporter ending stocks are not expected to expand as strong global demand and supply are projected to nearly balance.
Wheat ending stocks and farm prices: Lower U.S. beginning stocks and production in 2013/14 are partly offset by lower expected use leaving ending stocks down 8 percent from 2012/13. At 639 million bushels, 2013/14 ending stocks would be the lowest since 2007/08 when stocks fell to 306 million bushels.
Stocks remain far from tight with the ending stocks-to-use ratio for 2013/14 projected at 28.0 percent, down just slightly from the 28.2 percent expected for 2012/13. The 2013/14 season-average farm price is projected at $7.00 per bushel, down $0.90 from the midpoint of the record high range projected for 2012/13.
Wheat farm prices are expected to be supported during the early months of the June-May wheat marketing year by favorable opportunities for forward pricing and strong summer corn prices. Farmers traditionally market more than half of the wheat crop from June through September.
Corn supply, demand, and price outlook for 2013/14
Corn supplies: Corn production in 2013 is projected at a record 14,530 million bushels, up 3,750 million or 35 percent from the drought-reduced 2012 crop. The 2013/14 corn supply is projected to rise 28 percent to a record 15,187 million bushels as the increase in production far outweighs the year-to- year decline in beginning stocks with the smallest carryin in 17 years.
Prospects for a record crop are supported by higher harvested area and a return to trend yields. Harvested area is projected at 88.8 million acres, up 1.4 million from 2012 and the highest since 1933. Although planted area is projected down slightly on the year, harvested area expands with a return to more normal yields, more normal abandonment rates, and a reduction in area harvested for silage.
Severe drought in 2012 raised abandonment 400,000 acres compared with 2011 and, combined with tight supplies and high feed prices, boosted area harvested for silage to 7.4 million acres, 1.4 million higher than in 2011.
The national average yield is projected at 163.6 bushel per acre, up 40.2 bushels from last year’s drought ravaged yield. A return to normal summer weather supports a sharp recovery for corn yields as fall and winter dryness have little correlation with conditions during the following growing season and eventual yield outcomes. The trend projection is based on a yield model that accounts for summer precipitation and temperatures in determining expected yields.
The 2013 yield projection assumes corn planting progress at the 10-year average, no extreme dryness during June, temperatures and rainfall for July across the Corn Belt at the 1988-2012 averages, and an adjustment to reflect the asymmetric response of yields to July precipitation.
Corn use: Total corn use for 2013/14 is projected at 13,010 million bushels, up 1,773 million from the sharply curtailed usage in 2012/13. A sharp rebound in feed and residual use and higher food, seed, and industrial use boost domestic disappearance 1,173 million bushels.
Exports are also expected to rebound from this year’s 41-year low, but substantial foreign competition keeps exports at their second lowest level since 1993/94 as the U.S. share of world corn trade struggles to recover.
Corn feed and residual use: Feed and residual use for 2013/14 is projected at 5,400 million bushels, up 950 million bushels from the 2012/13 forecast. Much of the rebound reflects higher expected residual disappearance with the projected record crop. Lower feed costs are also expected to provide an economic incentive for increased feed use.
Tight supplies of feeder cattle and increased heifer retention are expected to extend the decline in beef production through 2014. Lower beef production is more than offset by expected increases in poultry and pork output, raising corn feeding slightly for the year.
Dairy cow numbers are expected to fall slightly, but milk per cow is projected to continue to increase.
Corn food, seed, and industrial use: Food, seed, and industrial (FSI) use of corn in 2013/14 is projected at 6,110 million bushels, up 4 percent following the sharp decline for the current marketing year. This would be up 223 million bushels from 2012/13, but still 327 million below 2011/12 when FSI use reached its highest-ever level.