What is in this article?:
- Corn prices reflect 2012 acreage, larger stocks
- Summer weather largest factor
• Prospects for a large increase in corn acreage support expectations for more abundant stocks next year, but opinions about the magnitude of the build-up vary considerably.
• Anecdotal evidence suggests that some acreage intended for corn will be planted to soybeans due to the shift in price relationships following the March survey.
Summer weather largest factor
Good predicted that, in the end, summer weather will be the largest determinant of the average yield. A yield expectation of about 162.5 bushels seems most reasonable at this time, pointing to a crop of 14.3 billion bushels.
Good added that consumption of U.S. corn during the year ahead is also subject to a lot of uncertainty due to the unknowns surrounding a wide array of factors that include crop production in the rest of the world, U.S. biofuels policy, and domestic and world economic conditions.
He said the starting point in making consumption projections is the expected level of use during the current year.
“As pointed out last week, however, the likely level of consumption this year is not yet settled,” Good said. “For ethanol, the rapidly approaching blend wall for E10 and the delays in implementing E15 suggest a plateauing of corn use in that category near the 5 billion bushels expected for this year.
“The USDA projects feed and residual use of corn during the current year at a modest 4.6 billion bushels,” Good said.
“While use during the first half of the year suggests consumption could exceed the projection, declining cattle numbers, increased wheat feeding, and more new-crop corn feeding point to a slowing of use during the last half of the year.
“Some modest expansion in livestock production other than beef, less wheat feeding next summer, a lack of increase in distillers grain production, some new crop corn feeding in August, and lower corn prices support prospects for more corn feeding next year. Feed and residual use might be near 5 billion bushels,” he said.
Good said that U.S. corn exports during the current year are projected at a relatively low level of 1.7 billion bushels, reflecting in part competition from the large world grain crop of last year. Prospects for less competition from Argentina and perhaps from the Black Sea region next year, along with larger imports by China, point to a rebound in exports to near the long term average of 1.9 billion bushels.
With food, seed and industrial use (excluding ethanol) near 1.425 billion bushels, total consumption next year might be near 13.325 billion bushels. With beginning stocks of 800 million bushels and imports of 15 million bushels, stocks at the end of the 2012-13 marketing year would be near 1.79 billion bushels.
Stocks at that level would represent a stocks-to-use ratio of 13.4 percent. Under this scenario, the 2012-13 marketing year average price would be expected to be in the $4.50 to $5.00 range.
The USDA’s May 10 World Agricultural Supply and Demand Estimates (WASDE) report will contain a forecast of the 2012-13 supply and demand balance for corn.
“A larger production estimate than used here will likely be reflected in that forecast as March acreage intentions, and probably a higher yield forecast, will be used,” Good said.