WASDE: US corn yield, supply estimates increased

By Susanne Retka Schill | January 12, 2012

The corn market was expected to drop sharply following the release of the USDA’s monthly World Agriculture Supply and Demand report. The report, indeed, did increase the projection for U.S. feed grain supplies for 2011-’12, and, although it lowered projections for ending stocks in the U.S., the global ending stock projection is similar to last year.

Corn production is estimated 48 million bushels higher than the previous report with a 0.5-bushel-per-acre increase in yield and a 45,000-acre increase in harvested area. Sorghum production is lowered 32 million bushels with yields estimated 0.9 bushels per acre lower and harvested area reduced 503,000 acres. The increase in corn production more than offset the reduction for sorghum.

Corn use for 2011-’12 is raised with higher exports. Exports are projected 50 million bushels higher reflecting the strong pace of sales to date and reduced prospects for Argentina. Ending stocks are projected 2 million bushels lower at 846 million bushels. The 2011-’12 season average farm price for corn is lowered 20 cents per bushel on each end of the range to $5.70 to $6.70 per bushel. Prices received by producers to date have remained well below prevailing cash bids limiting the upward potential for the season-average farm price, according to the USDA report.

Global coarse grain supplies for 2011-’12 are nearly unchanged this month as higher corn production in the United States, Ukraine, EU-27, and Russia is mostly offset by lower expected corn production in Argentina and the lower sorghum production estimate for the United States.

Argentina 2011-’12 corn production is lowered 3.0 million tons as extended dryness since late November and periods of extreme heat in late December and early January have sharply reduced yield prospects. Recent rains have brought much needed relief from high temperatures and dryness, and are expected to stabilize crop conditions, but substantial damage has been done, especially to corn that was exposed to heat during pollination and early grain fill.

Corn production is raised 1.5 million tons for Ukraine based on the latest official indications of record yields and output. EU-27 and Russia corn production are each raised 0.4 million tons based on the latest official estimates. Brazil corn production is unchanged as rising area prospects for second crop corn offset a reduction in first crop yields resulting from dryness in December and early January in the southern growing areas.

Global corn trade for 2011-’12 is raised slightly with lower projected corn exports from Argentina more than offset by higher exports from the United States and Russia. Imports are raised 1.0 million tons for China, more than offsetting reductions for Syria and Taiwan. World corn ending stocks are raised 1.0 million tons as lower stocks in Argentina are more than offset by higher stocks in Ukraine and China. At 128.1 million tons, global stocks are nearly unchanged from2010-’11.

The January WASDE report pegged area harvest at 84 million acres of corn, compared to 81.4 in the last marketing year and 79.5 in 2009-’10. Corn yield for the current marketing year is 147.2 compared to 152.8 for last year and 164.7 for 2009-’10. Ehtanol use in the January report was unchanged from the previous month’s at 5 billion bushels, down slightly from 2010-’11 preliminary estimates of 5.02. In 2009-’10, USDA reports 4.6 billion bushels of corn was used by the ethanol industry.