USDA: Corn supply projections up slightly, feed demand up
Three USDA reports issued within hours of each other Jan. 11 will be scrutinized closely by corn traders and users to see whether supply and demand are maintaining the expected balance.
In the Grain Stocks report, corn stored in all positions on Dec. 1 totaled 8.03 billion bushels, down 17 percent from Dec. 1, 2011. Of the total stocks, 4.59 billion bushels are stored on farms, down 26 percent from a year earlier. Off-farm stocks, at 3.44 billion bushels, are down 1 percent from a year ago. The September - November 2012 indicated disappearance is 3.74 billion bushels, compared with 3.84 billion bushels during the same period last year.
In the Crop Production Annual Summary released shortly before the monthly supply/demand report, the USDA set 2012 corn production at 10.8 billion bushels, up 1 percent from the Nov. 1 forecast, but 13 percent below 2011 production. The average yield is now estimated at 123.4 bushels per acre, compared to 147.2 for 2011. Harvested area for corn in the U.S. is lowered 346,000 acres for the crop taken off in 2012, but the 1.1-bushel-per-acre increase in the estimated yield boosts production 55 million bushels from previous estimates. The area harvested for grain is estimated at 87.4 million acres, down slightly from the November forecast, but up 4 percent from 2011. Sorghum grain production in 2012 is estimated at 247 million bushels, down 4 percent from the Nov. 1 forecast but up 15 percent from 2011. While the sorghum harvested area is nearly unchanged, a 1.3-bushel-per-acre decrease in the estimated yield lowers production 9 million bushels.
In the Jan. 11 WASDE report, USDA makes no change from the previous month to projected corn use for ethanol at 4.5 billion bushels. The report does raise the total corn use for 2012/13 with higher expected feed and residual disappearance more than offsetting reduced prospects for exports. Feed and residual use is projected 300 million bushels higher based on September to November disappearance as indicated by Dec. 1 stocks and on higher expected beef, pork and poultry production.
Corn exports are projected 200 million bushels lower reflecting the slow pace of sales and shipments to date and increasing pressure from larger supplies and exports for South America. Corn ending stocks are projected 44 million bushels lower at 602 million. The season-average farm price for corn is unchanged at $6.80 to $8 per bushel. While stiff competition has limited U.S. corn exports, higher domestic disappearance leaves the balance sheet historically tight and is expected to support continued strong and volatile prices well into summer, particularly in the domestic cash markets.
Other 2012/13 feed grain changes this month include increases in projected sorghum, barley and oats feed and residual disappearance as indicated by the Dec. 1 stocks. Sorghum exports are projected 35 million bushels lower with feed and residual use projected up 50 million bushels. The season average sorghum farm price is raised 20 cents at the midpoint to $6.70 to $7.90 per bushel.
Global coarse grain supplies for 2012/13 are projected 2.9 million tons higher mostly reflecting the larger U.S. corn crop and increased corn production for South America. Paraguay corn production is raised 1.1 million tons on a higher projected yield, which is in line with historical yield and production revisions this month. Brazil corn production is raised 1.0 million tons on higher expected yields with favorable December rainfall across the southern growing areas. Argentina corn production is raised 0.5 million tons as lower harvested area is more than offset by higher expected yields. Heavy rains and flooding in November and December delayed planting and reduced area prospects. Since then, clearing weather, the absence of threatening heat, and abundant soil moisture have set the stage for strong year-to-year yield increases, particularly in the central growing region. Partly offsetting these increases are reductions in corn output of 0.5 million tons for Russia and 0.1 million tons each for the Philippines and Serbia. Changes for Russia and Serbia reflect the latest government estimates. The smaller expected crop in the Philippines is based on the latest assessment of typhoon damage in December.
Changes to 2012/13 global coarse grain exports, in the aggregate, are small this month, but increases in 2011/12 and 2012/13 local year corn exports for South American countries have substantial implications for U.S. corn exports during the 2012/13 September-August marketing year. Exports for Argentina are raised 0.5 million tons for 2011/12 and 1.0 million tons for 2012/13. Exports for Brazil are raised 0.5 million tons for 2011/12 and 1.5 million tons for 2012/13. With the local marketing years in both of these Southern Hemisphere countries running from March through February, increases in both years weigh against U.S. export prospects for 2012/13. Similarly, in Paraguay, where the local marketing year runs from January through December, corn exports are boosted 0.6 million tons and 0.5 million tons, respectively, for 2011/12 and 2012/13, also reducing prospects for U.S. corn exports during the current marketing year. EU-27 corn exports are also raised 0.5 million tons for 2012/13.
Global corn consumption for 2012/13 is raised 5.6 million tons mostly on the increase in U.S. corn feeding this month. Consumption is raised slightly for Paraguay, but lowered slightly for Russia and Serbia. Global corn ending stocks for 2012/13 are projected 1.6 million tons lower with lower expected stocks in the United States, Brazil, and Argentina. Stocks are raised for Paraguay with the larger projected crop.