The supply and demand picture both for old and new-crop corn as well as for new-crop soybeans continues to worsen for crop producers, according to USDA’s World Agricultural Supply and Demand Estimates (WASDE), released April 10.
"We are not selling corn, we are not feeding it, and we are not making it into ethanol. Corn prices are going to head down," says Peter Georgantones, account executive with Roy E. Abbott Futures, Minneapolis. Georgantones was the commentator on an MGEX press call following the report.
Corn Could Head to $4.00
Georgantones expects new-crop corn prices to sink to near $4.00 per bushel, barring any major weather issues, and says that $7.50 corn choked plenty of demand.
USDA decreased its feed use and residual estimate by 150 million bushels, upped demand for corn from the ethanol sector by 50 million bushels, and lowered exports by 25 million bushels to come up with its higher estimated carryout.
USDA raised its monthly 2012-13 corn carryout by 125 million bushels to 757 million bushels, which was still substantially lower than the average estimate of 812 million bushels, but well within the range of 625 to 925 million bushels.
Following the report, corn prices initially rallied about 20 cents before falling close to the flat line.
The department’s projected soybean carryout of 125 million bushels was also lower than the average trade estimate of 136 million bushels and within the range of 107 million to 160 million bushels. That puts the stocks-to-use ratio at a tight 4.1 for old-crop soybeans.
Larger world supplies of soybeans and a good U.S. crop could push new-crop soybean prices to $10/bu., Georgantones says.
"For corn prices to work their way higher, it would take true sings that demand has started to pick up," says Chad Hart agricultural economist with Iowa State University. "We could see it in exports or ethanol." A return to a dry pattern in the western Corn Belt could also lift prices, he says.
Wheat Feeding Falls Out of Favor
The wheat carryout of 731 million bushels was slightly higher than the average trade estimate of 727 million bushels and within the range of estimates of 700 million to 755 million bushels. The big shift in wheat stocks came mostly from hard red winter stocks, which were raised 25 million bushels.