In this month’s “World Agricultural Supply and Demand Estimate” report, USDA forecast corn stocks for 2012-13 to rebound by a “sizable” quantity, according to Dr. Bill Lapp, President of Advanced Economic Solutions, in his report this week. He added that most market analysts dismissed USDA’s forecast of record corn yields as being too high. A yield of 166 bushels per acre would be 4 percent above trend and historically at the 64th percentile. This yield level “is not extreme, but hope appears to be a part of USDA’s equation,” Lapp added.
Also, in the latest WASDE report, USDA left ending corn stocks changed for both old and new crops. The 2011-12 ending stocks remain forecast at 851 million bushels or 6.7 percent for the stocks-to-use ratio, a 50-million-bushel reduction in exports (to 1,650 million bushels) was offset by a 50-million-bushel increase in ethanol use (to 5,050 million bushels). At 851 million bushels or 6.7 percent of usage, this is the tightest stocks-to-use ratio since 1995-96. USDA forecast corn usage for 2012-13 to increase significantly (+1.1 billion bushels) to 13.8 billion bushels and includes gains in feed and residual (+900 million bushels), and exports (+250 million bushels), while corn for ethanol is forecast to decline 50 million bushels to 5,000 billion bushels. Ending stocks for 2012-13 are projected to rise to 1.881 billion bushels or 13.7 percent of usage.
The average farm price for corn for 2011-12 is expected to be $5.95-$6.25 per bushel. For 2012-13 the comparable price is forecast to decline to $4.20-$5.00 per bushel, unchanged from the May report.
For soybeans, USDA reduced the 2011-12 ending soybean stocks to 175 million bushels from the 210 million bushels forecast last month. Also, USDA lowered the August 2013 carryout for the 2012-13 crop down to 140 million bushels, which would be a 4.3 percent stocks-to-use ratio. That would be the smallest amount of soybeans on hand since the mid-60’s. USDA raised the 2011-12 soybean exports by 20 million bushels to 1.335 billion bushels reflecting increased global demand. Most of the demand is from China, where soybean production is down a half million tons because of production switches to corn. Because of the expected shortfall, USDA has reduced the crush forecast for next year by 10 million bushels and the export forecast by the same. Total production is expected at 3.205 billion bushels and total use at 3.255 billion bushels. However, USDA did not change the expected season average price from the $12-$14 per bushel range set in the month earlier report.
