USDA projects record new crop prospects, sharply lower corn price

By Susanne Retka Schill | May 10, 2012

USDA projects record feed grain supplies and a sharp drop in corn prices for the 2012-’13 corn crop in its May 10 World Agriculture Supply and Demand Estimates report. And, it raises project ending stocks for the current year on increased wheat feeding and the expectation that early corn harvest will take the edge off of tight supplies at summer’s end. The USDA cautioned that the projects are highly tentative, given the U.S. crop is still being planted and Southern Hemisphere new crop planting is months away.

U.S. feed grain supplies for 2012-’13 are projected at a record 416.3 million tons, up 16 percent from 2011-’12 with higher area and production for corn, sorghum, barley, and oats. Corn production for 2012-’13 is projected at a record 14.8 billion bushels, up 2.4 billion from 2011-’12. A projected 5.1-million acre increase in harvested area and higher expected yields, compared with 2011-’12, sharply boost production prospects. The 2012-’13 corn yield is projected at a record 166.0 bushels per acre, 2.0 bushels above the 1990-2010 trend reflecting the rapid pace of planting and emergence. Despite the lowest expected carryin in 16 years, corn supplies for 2012-’13 are projected at a record 15.7 billion bushels, up 2.2 billion from 2011-’12.

Projected corn use for ethanol is unchanged on the year as weak gasoline consumption limits domestic blending opportunities. Total U.S. corn use for 2012-’13, however, is projected up 9 percent from 2011-’12 on higher feed and residual disappearance, increased use for sweeteners and starch, and larger exports. Feed and residual use for 2012-’13 is projected up 900 million bushels reflecting a sharp rebound in residual disappearance with the record crop and an increase in feeding with lower corn prices and higher expected pork and poultry production. Corn exports for 2012-’13 are projected 200 million bushels higher than in 2011-’12 on abundant domestic supplies, lower prices, and higher expected China demand. Record foreign corn supplies, however, are expected to limit the increase in U.S. shipments. U.S. corn ending stocks for 2012-’13 are projected at 1.9 billion bushels, up 1.0 billion bushels from the current year projection. The season-average farm price is projected at $4.20 to $5 per bushel, down sharply from the 2011-’12 record projected at $5.95 to $6.25 per bushel.

Projected corn ending stocks for 2011-’12 are raised 50 million bushels to 851 million with lower expected June-August feed and residual disappearance. The large year-to-year increase in winter wheat production and attractive prices for wheat relative to corn are expected to raise summer wheat feeding. Record mid-April corn plantings and early May crop emergence boost prospects for early 2012-crop corn usage before the September 1 beginning of the 2012-’13 marketing year. As in recent years, this late-summer new-crop usage is expected to displace old-crop usage and boost carryout.

Global coarse grain supplies for 2012-’13 are projected at a record 1,389.2 million tons, up 6 percent from 2011-’12. Global corn production for 2012-’13 is projected at a record 945.8 million tons, up 75.3 million from 2011-’12, and the 6th straight year that world corn output has set a new record. Foreign corn production is also projected to be a record at 570.1 million tons, up 13.6 million with the largest increases for Argentina, Mexico, Canada, South Africa, China, and Ukraine. Global corn trade is projected higher for 2012-’13 with imports raised 6 percent mostly supporting higher corn feeding in China, Vietnam, South Korea, Japan, EU-27, and the Middle East. Global corn food, seed, and industrial use is also raised with increases in corn processing expected for China, Argentina, EU-27, and Brazil. Global corn consumption is projected at a record 921.0 million tons, up 53.7 million from 2011-’12 with more than half of the increase in foreign markets. World corn ending stocks for 2012-’13 are projected at 152.3 million tons, up 24.8 million from 2011-’12, and the highest since 2000-’01.