USDA’s Chief Economist Joe Glauber told participants of the Agricultural Outlook Forum this week in Washington that farmers will plant 94 million acres of corn this year. If realized, this acreage would be the largest plantings since 1944. Soybean acreage is projected at 75 million acres, unchanged from 2011, but down 1.6 million from last year’s intentions, which were not achieved partly because of excessive moisture during planting, especially in the upper Midwest, Glauber said.
Glauber noted that returns for soybeans and corn are again historically high, reflecting strong new-crop futures and cash forward prices. Conservation Reserve Program (CRP) enrollments are also down again for 2012-13 with total CRP area projected at 30 million acres, 6.8 million acres lower than at its peak enrollment in 2007-08.
“It is gratifying for an economist to watch markets follow the basic laws of supply and demand. High prices have prompted a global production response for most commodities,” Glauber said. “As a result of increased plantings and generally favorable yields, record production levels have been reached this year, which have helped moderate prices for most crop prices.” He added that there are still a number of key uncertainties starting with the size of the South American corn and soybean crops and the persistent dry areas of the southern United States.
“Corn stocks have tightened further in 2011-12. World ending stocks for corn for 2011-12, expressed in terms of use, are estimated at about 52.3 days of use, the lowest level since 1973-74,” Glauber said. Slowing demand for ethanol means that corn stocks will likely increase in 2012-13, assuming a return to trend yields. “This should help moderate record feed grain prices. Livestock markets should see increasing margins towards the end of 2012 as the new crop is harvested bringing down feed costs,” he added. Glauber forecasts corn prices to average $5.00 per bushel in 2012-13, down almost 20 percent from record levels in 2011-12.
