Corn stocks lowest since 1995

Oct 12, 2012

While USDA’s October World Agricultural Supply and Demand Estimates (WASDE) report had some big changes, it was in line with most analysts’ expectations. Corn yields remained declined slightly, but 2011 stocks were cut drastically and are now the lowest since 1995/96, according to analysts. Soybeans headed in a different direction as yields were increased by 2.5 bushels.

USDA updated acreage estimates using certified Farm Services Agency data.


Corn: U.S. feed grain supplies for 2012/13 are projected lower with reduced carryin and production this month. Corn beginning stocks for 2012/13 are lowered 193 million bushels based on the Sept. 1 stocks estimate. Sorghum beginning stocks are lowered 4 million bushels, also on the Sept. 1 stocks. Forecast corn production for 2012/13 is lowered 21 million bushels with higher area more than offset by lower yields. The U.S. corn yield is forecast at 122 bushels per acre, down 0.8 bushels from the previous month. Lower yields in Illinois are only partly offset by increases for Minnesota and North Dakota.


Forecast sorghum production is raised 6 million bushels with higher yields for Texas and Arkansas.

For 2012/13, corn supplies are projected 214 million bushels lower and sorghum supplies are projected 2 million bushels higher.

Barley supplies are down 6 million bushels with a small production decline from the Small Grains report and a 5 million-bushel reduction in projected imports with a smaller crop in Canada. Oats supplies are down with a 3 millionbushel reduction in output, also from the Small Grains report.

U.S. corn use for 2012/13 is lowered with a 100 million-bushel reduction in projected exports. Corn exports are lowered based on the slow pace of sales to date and strong competition from Brazil. Corn ending stocks for 2012/13 are projected 114 million bushels lower at 619 million. Projected ending stocks are raised slightly for sorghum, but lowered for oats. Barley ending stocks are projected 19 million bushels higher, reflecting a 25 million-bushel reduction in expected feed and residual use based on indications from the Sept. 1 stocks. The season-average farm price for corn is lowered 10 cents on both ends of the range to $7.10 to $8.50 per bushel based on early season cash and futures prices and prices available for forward delivery through early 2013.

Global coarse grain supplies for 2012/13 are projected 11 million tons lower, mostly reflecting reduced corn beginning stocks in the U.S. and Brazil. Brazil beginning stocks are lowered with 2011/12 exports increased 4.5 million tons. Global corn production for 2012/13 is lowered 2 million tons with reductions for EU-27, Serbia and the U.S. Global sorghum production is raised 0.7 million tons with small increases for Australia, the U.S., and several African countries. Global rye production is raised 0.5 million tons with an increase for EU-27. Offsetting these increases is a 1.8 million-ton reduction in world barley output, mostly on smaller crops in Australia and Canada, and a 0.5 million-ton reduction for oats with a smaller crop in Australia.

Global 2012/13 corn exports are lowered 1.1 million tons this month with the U.S. reduction partly offset by a 1 million-ton increase for Brazil and a 0.5 millionton increase for India. Imports for EU-27 are raised 2 million tons with the smaller crop. Global corn feeding is down 1.4 million tons. Corn and sorghum food use is raised this month for several African countries where these grains remain a staple food. Global barley feeding is lowered with reductions for Australia, Canada, EU-27 and the U.S. Barley feeding is raised for Saudi Arabia. Global coarse grain ending stocks for 2012/13 are lowered with projected corn ending stocks down 6.7 million tons on reductions for Brazil and the U.S.

Wheat: Projected U.S. wheat ending stocks for 2012/13 are lowered 44 million bushels as higher feed and residual disappearance more than offsets a reduction in projected exports. Production for 2012/13 is raised 1 million bushels based on the latest estimate from the Sept. 30 Small Grains report.

Feed and residual use is projected 95 million bushels higher reflecting the Sept. 1 stocks that indicated higherthan-expected June-August disappearance. Exports are lowered 50 million bushels on the pace of shipments and sales to date and stronger expected competition. Export projections are lowered for Hard Red Winter and Soft Red Winter wheat.

The projected range for the 2012/13 season-average farm price is narrowed 15 cents on both ends to $7.65 to $8.55 per bushel. Small revisions to 2011/12 feed and residual disappearance and seed use reflect recent updates to stocks and acreage.

Global wheat supplies for 2012/13 are projected 6.2 million tons lower, mostly reflecting lower production for Australia, Russia and EU-27. Production for Australia is lowered 3 million tons as a continuation of dryness through September during critical flowering and grain fill stages has reduced yield potential for this year’s crop. Production for Russia is lowered 1 million tons, reflecting the latest harvest reports that indicate lower yields and harvested area for spring wheat.

Production is lowered 0.8 million tons for EU-27, mostly reflecting a reduction for the United Kingdom where excessive harvest-time rainfall has reduced production.

Other EU-27 country changes were smaller and mostly offsetting. Production is also reduced for Uruguay, Canada, Algeria and Kyrgyzstan, each down 0.3 million tons based on the latest indications from government sources. Also reducing 2012/13 supplies this month is a 0.5 million-ton reduction in global beginning stocks, mostly on higher 2011/12 exports for Australia. Upward revisions for 2010/11 and 2011/12 Argentina production partly offset the Australia reduction.

Global wheat consumption for 2012/13 is lowered 2.4 million tons as higher feed and residual use in the U.S., Canada and EU-27 is offset by lower wheat feeding for Russia, lower food use for India, and the reduction in Thailand and Vietnam consumption driven by reduced Australia production and exports. Australia exports are lowered 3 million tons for the 2012/13 local October- September marketing year and raised 1 million tons for the 2011/12 local year.

Most of the reduction for 2012/13 is expected after June 2013 maintaining substantial competition for U.S. exports during the remainder of the 2012/13 June-May U.S. marketing year. Argentina 2011/12 exports are also raised 0.6 million tons for the local December-November marketing year, further adding to pressure on U.S. exports during 2012/13.

Global wheat exports for 2012/13 are lowered 4 million tons with the Australia and U.S. reductions, and reductions of 1 million tons and 0.5 million tons, respectively, for EU-27 and Canada. Increases of 1 million tons each for India and Russia are partly offsetting. Smaller export changes include a 0.3 million-ton reduction for Uruguay and a 0.2 million-ton increase for Mexico. World ending stocks for 2012/13 are projected 3.7 million tons lower, mostly reflecting reductions for Australia, the U.S. and Russia.

Livestock: The forecast for 2013 red meat and poultry production is raised slightly as higher pork and poultry production more than offsets lower beef production. Lower expected cattle placements in the third quarter will manifest itself as slightly lower supplies of fed cattle in early 2013.

The recent Quarterly Hogs and Pigs report estimated a small decline in the June- August pig crop and indicated that producers intend to reduce farrowings through early 2013, but it is expected that continued growth in pigs per litter will mitigate much of the decline in farrowings.

The forecast for 2013 poultry production is raised slightly. For 2012, the total meat production forecast is reduced on lower beef and broiler production forecasts, although pork and turkey are forecast higher. Egg production is forecast higher for both 2012 and 2013 based on hatchery data.

Beef imports are reduced for 2012 based on a slower pace of imports from Canada, but are unchanged for 2013. Beef exports are unchanged for 2012 and 2013.

Pork exports are unchanged for 2012, but are raised slightly on expected late 2013 improvements in sales.

Imports are reduced slightly for 2013. Poultry export forecasts are unchanged for both 2012 and 2013. Only small changes are made to 2012 livestock and poultry prices, generally reflecting small adjustments to fourth-quarter prices. Cattle and hog prices for 2013 are unchanged, but the broiler price is tightened at both ends of the range and the turkey price is lowered at the high end of the range.

Analysis: The U.S. supply and demand report is bullish for corn, according to DTN Senior Analyst Darin Newsom. “Ending stocks for 2012-13 are expected to fall to 619 million bushels, the smallest since 1995-96 with ending stocks to use pegged at 5.6 percent. Soybeans could be viewed as neutral to bearish, though the ending stocks numbers of 130 was slightly below the pre-report average of 134 million bushels. Wheat ending stocks of 654 million bushels should be viewed as neutral.”

In general, the world numbers should be viewed as bullish for corn and wheat, Newsom said. “World corn ending stocks fell more than 6 million tons to 117.3 million tons, putting ending stocks to use at 13.7 percent, closing in on the 1973-74 level of 12.1 percent. Soybean ending stocks increased about 6 million tons, reflecting the larger U.S. crop, while South American production was left unchanged. Beginning stocks were also increased 1 million tons. Wheat ending stocks fell 3.7 million tons, due in large part to a 3 million tons decrease in Australian production.”—Traci Eatherton, WLJ Editor