Pro Farmer Extra
- From the Editors of Pro Farmer newsletter
Just lost 1.7 bu. per acre off 2012 corn supplies
March 30, 2012
Today's USDA Grain Stocks Report sent the corn, soybean and wheat markets sharply higher. While smaller-than-expected March 1 corn stocks were the fuel in Friday's market, it did supply support for new-crop futures, as well.
It had to support new-crop futures... if it didn't, the 3.943-million-acre increase in corn planting intentions would have weighed heavily on new-crop futures.
The source of support for new-crop corn futures was the expected smaller 2012-13 supply cushion. USDA currently estimates 2011-12 corn carryover at 801 million bu., but March 1 stocks suggest a carryover closer to just 650 million bushels. That means the 2012-13 marketing year is now expected to start with a supply side cushion that is 150 million bu. smaller than estimated just a few weeks ago. Traders will be looking for the cut to old-crop carryover stocks in the April Supply & Demand Report.
That's where the "1.7-bu. cut to 2012 corn supplies" comes into play. Corn plantings today were estimated at 95.864 million acres. If combines roll across 92.5% of those acres, harvested corn acres will reach about 88.7 million this fall. If the 2012-13 supply cushion is cut another 150 million bu. in the April Supply & Demand report, that's like losing 1.7 bu. per acre off those 88.7 million harvested corn acres. That's a big reason new-crop futures found support from tighter old-crop stocks.
However, if all those 95.864 million acres are planted and the 88.7 million acres are harvested and the national average yield hits our projection of 162 bu. per acre, there will be plenty of supply for the 2012-13 marketing year. Under that production scenario, there would be enough room to support record-large corn use and to push 2012-13 corn carryover up to about 1.6 billion bushels. If the market is hit with a carryover estimate that high in the May Supply & Demand Report (USDA's first official look at the 2012-13 marketing year), today's futures price of $5.40 could look like an excellent selling opportunity.
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