If this fall’s corn harvest is at least 12.5 billion bushels, it “would be large enough to supply the market and add a small amount to year ending stocks,” according to Dr. Darrel Good, University of Illinois agricultural economist in a report this week from farmdocdaily. Based on corn planting intentions of nearly 97.3 million acres and an implied harvested area for grain of about 90.2 million acres and a trend line yield of 161.5 bushels per acre, the expectations are for a record corn crop 14.6 billion bushels. This size of crop would be 2.1 billion bushels or 14 percent more than market needs, Good explained.
Corn production prospects, however, are now “being called into question,” Good said because the late start to the planting season in most of the major corn production states can impact yields and actual acreage planted to corn. All other factors equal, late planting poses some yield threat relative to trend value. In addition, continued delays to planting, particularly in northern areas, might reduce the acreage planted to corn relative to intentions reported in March. The magnitude of potential yield and acreage reduction, if any, is very difficult to assess at this time since the planting season extends for another month, the analyst noted.
Assessing the usage potential for corn for the upcoming marketing year is not “straight-forward” since usage depends on the strength of demand in each of the major users categories, as well as the price of corn. The price of corn, in turn, will be influenced by the size of the U.S. crop. Domestic non-feed use of corn is the least complicated category of consumption to forecast since demand is relatively stable and consumption is least sensitive to the price of corn. Domestic corn usage for ethanol has stagnated near 13 billion gallons of ethanol in 2011 and 2012 as the E10 blend wall was reached. The blend wall is expected to expand only slowly during the 2013/14 corn marketing year as this market is limited by the lack of penetration of both E15 and E85 and lack of growth in motor fuel consumption.
Assuming the 2013 corn crop is larger than that of 2012, that there is some modest expansion in pork and broiler production, and that there is some modest increase in production of distillers’ grains, feed and residual use of corn might recover to about 4.8 billion bushels during the upcoming marketing year, Good noted.
From 2003-04 through 2009-10, annual U.S. corn exports ranged from 1.8 to 2.4 billion bushels. Forecasting exports near the average of 2.0 billion bushels is a reasonable expectation, but not likely. Exports declined to 1.54 billion bushels last year and are projected at only 800 million bushels for the current marketing year, Good said.
Another large crop in Brazil and a rebound in Argentine production this year may limit the rebound in U.S. exports during the year ahead. A key demand uncertainty is the likely size of the Chinese market. Exports can be forecast with very little confidence. A very modest 110 million bushels of U.S. corn have been sold for export next year. Good said he is projecting 1.2 billion bushels for U.S. corn exports.
USDA will provide its assessment of the potential supply, usage, and price outlook for corn for 2013-14 on May 10 when the department issues its “World Agricultural Supply and Demand Estimates” report.
