Still, another giant corn crop is a very real possibility this fall.
Soybean supplies remain tight in the United States, but world supplies of both corn and soybeans are nearing the burdensome level, according to USDA’s latest World Agricultural Supply and Demand Estimates, released Jan. 10.
Looking at corn first, USDA lowered its estimate for world ending stocks of corn by more than 2 million metric tons in January compared with December’s projections, but year-over-year ending stocks have grown rapidly. USDA projects world ending stocks at 160.23 million metric tons, up nearly 21% from last year’s carryout.
The China Factor
"The world’s storehouse is China," says Chad Hart, agricultural economist with Iowa State University. China currently holds 71.5 million metric tons of corn, nearly 45% of the world’s total, and its stocks are growing. In the 2010-11 crop year, China had about 50 million metric tons in carryout. That grew to close to 60 million in 2011-12, and then to roughly 65 million in 2012-13.
"China has been importing a sizeable amount of corn even with a record crop and larger stocks," says Hart. "That tells me China’s demand side is high enough and that it wants to keep enough product on hand to meet that demand."
According to USDA, China’s demand for corn has indeed grown, from 188 million metric tons in 2011 to 216 million metric tons this year.
Even so, world corn stocks are nearing the point where they could soon become burdensome. According to Hart, the world stocks-to-use ratio for corn is 17%, up from 15% last year. At 20%, the ratio indicates a burdensome supply. The U.S. stocks-to-use ratio is now nearing 14%, compared with last year’s 8%. At 15%, Hart says, U.S. stocks become troublesome.
"The upshot is that not only in the United States are we longer on corn, but worldwide we are as well," he says. "We have lots of corn in storage worldwide to meet demand."
Plenty of Beans Worldwide
"Between the December and January WASDE reports, USDA found more soybeans worldwide on more production but steady demand, which contributed directly to world ending stocks of soybeans," says Hart. Most of the world’s stocks of soybeans are in South America.
The stocks-to-use ratio for beans is also growing. Last year, the world ratio of stocks to use for soybeans was 23.5% . This year, it is 26.7 percent, and a ratio between 25 and 30 percent is considered burdensome.
"The closer the ratio gets to 30 percent, the more concerning it is," notes Hart.
In the United States, however, soybeans are still tight with a stocks-to-use ratio of 8 percent, unchanged from last year.
"U.S. stocks don't become burdensome until they reach about 350 million bushels," says Hart. "We tend to be staying at the very low, very tight level on beans." U.S. ending stocks of soybeans have been under 170 million bushels since 2010, he adds.
"The export market for soybeans has really picked up steam over the past five years," Hart says.
Despite the discrepancy between U.S. corn and soybean stocks, Hart expects only about 3 million acres to shift from corn to soybeans this spring. He predicts somewhere between 91 million and 92 million acres will be planted to corn this year and about 79.5 million acres to beans.
"Every state south and east of Iowa set record corn yields last year," he notes. "I believe those farmers will stick with corn again this year."
Despite his projection for a reduction in corn acres, he says enough corn will be planted this spring that another humungous corn crop is a real possibility this fall.