This month’s USDA report did not usher in any major corn surprises, but ending stocks were forecast higher than the average trade guess.
Food, seed and industrial use was raised 20 million bushels as corn for sweeteners and starch increased. Offsetting that increase was a 50 million bushel decrease in exports.
Ending stocks were raised 30 million bushels from last month to 632 million bushels or a 5.6 percent stocks to use ratio. The trade was expecting stocks to increase to 615 million bushels.
The season average price was dropped 5 cents on the lower side and 35 cents on the top side with a range of $6.75 to $7.65 a bushel.
Global stocks are projected at 4.647 billion bushels, 81 million bushels higher than last month. World production was raised 82 million bushels reflecting increases in foreign production while foreign consumption dropped slightly. The global stocks to use ratio is 13.6%, up 0.2% from last month.
May corn closed down 3 ¼ cents at $7.08 ¾ a bushel on Feb. 11. September corn closed at $5.84 ¾, down 4 ½ cents.
I would have 10 percent of 2013 production priced. The market appears somewhat oversold and could be due for a bounce up.
To some extent, a weather premium will need to be kept in the market until farther in the year. However, if U.S. weather cooperates with production, we could see a substantial drop in prices by fall.
Over the past 31 years the average difference between the February projection for U.S. ending stocks and the final estimate has been 209 million bushels with 20 years below the final estimate and 11 years above.
The next USDA Supply & Demand report will be released March 8, 2013.