What is in this article?:
- Corn market direction beginning to unfold
- Large crop on the way
• Among the factors to be revealed over the next few months, two of the most important are the rate of domestic feed and residual use and the prospective size of the 2012 U.S. crop.
• Even with higher average yields this year, substantially lower corn prices could have a disproportionately large impact on producer returns as anecdotal evidence suggests that a relatively small portion of the 2012 crop has been forward-priced at higher price levels.
The USDA’s projections of U.S. and world corn and feed grain supply-and-demand conditions presented in the May World Agricultural Supply and Demand Estimates (WASDE) report set the benchmark by which the corn market will judge unfolding events.
According to a University of Illinois agricultural economist, those events are continually unfolding, with some of the more important ones to be revealed this summer.
“Among the factors to be revealed over the next few months, two of the most important are the rate of domestic feed and residual use and the prospective size of the 2012 U.S. crop,” said Darrel Good.
“Feed and residual use of corn during the current marketing year is projected at 4.55 billion bushels. Use during the first half of the year, as implied by the quarterly stocks estimates, totaled 3.39 billion bushels.
“To reach the projection for the year, use during the last half of the year will need to total 1.16 billion bushels, about the same as was consumed during the same period last year. Use in that period totaled 1.718 billion bushels in 2010 and 1.631 billion in 2009,” he said.
Good said the projected decline in the pace of feed and residual use during the last half of the year is expected to come in the final quarter as a result of increased wheat feeding and the availability of more than the normal amount of new crop corn.
“Increased wheat feeding in the summer of 2011 was also expected but did not occur,” Good said.
“Based on the estimate of Sept. 1, 2011, wheat stocks, feed and residual use of wheat during the summer of 2011 was at a five-year low of 204 million bushels, 54 million less than was used in the summer of 2010.
“Early corn planting this year is expected to result in an early harvest of a larger percentage of the 2012 crop and additional consumption of new-crop corn in August,” he said.
According to Good, the pace of maturity of the crop will provide a gauge of the amount of corn likely to be harvested in August.
“The estimate of June 1 corn stocks, to be released on June 30, will provide for an estimate of feed and residual use during the third quarter of the marketing year and the level of use needed in the fourth quarter to reach the USDA projection,” Good said.