WASDE: Corn Stocks Surprise to the Upside
May 10, 2012
The USDA continued their streak of surprises by increasing ending corn stocks for 2011/12, despite analysts projecting a reduction in domestic corn supplies. The May WASDE also produced the first official projections for 2012/13, with a record high corn yield of 166 bushels. Domestic soybean stocks continue to dwindle as the usage ratio will be at a historically low rate due to increased U.S. exports and decreased South American production.
Projected U.S. 2011/12 ending corn stocks were increased 50 million bushels to 851 million bushels due to larger than expected wheat supplies and the competitive pricing wheat has compared to corn, implying wheat will be the choice of feed this summer. The 2011/12 projected range for season-average corn prices was $5.95 to $6.25.
2012/13 U.S. corn production was estimated to increase by 2.4 billion bushels from 2011/12 to 14.8 billion bushels due to increased harvested area and higher than expected yields. Average corn yields for 2012/13 were projected at 166.0 bushels per acre which was a 2.0 bushel per acre increase from the 1990 to 2010 trend due to the early planting. Domestic corn supplies were expected to increase by 2.2 billion bushels to a record 15.7 billion bushels. The 2012/13 projected range for season-average corn prices was $4.20 to $5.00, a $1.50 lower than 2011/12.
U.S. corn usage in 2012/13 is expected to increase by 9% on increased usage of sweeteners and starch, higher feed and residual use, and increased exports. Corn exports were estimated to increase by 200 million bushels due to increased supply, lower prices, and increased demand from China. 2012/13 U.S. ending corn stocks were estimated to increase to 1.9 billion bushels, a 1.0 billion bushel increase from 2011/12.
Global corn production in 2012/13 was projected to at a record 945.8 million tons, the 6th straight year that world corn production would set a new record. Global consumption was estimated to rise 53.7 million tons to a record 921.0 million tons. Ending 2012/13 stocks are projected at 152.3 million tons, the highest level in more than 10 years.
The USDA's projections were a surprise. We expect corn supplies will be tighter due to global demand, light carry over, and high expectations. The ending U.S. corn stocks for 2011/12 of 851 million bushels was the biggest surprise as we, and other analysts, felt this number would significantly decrease from the 801 million bushel projection in April.
2011/12 U.S. soybean exports were increased this month by 25 million bushels due to the lack of production in South America. The increase of soybean exports resulted in a 40 million bushel decrease in U.S. soybean ending stocks for 2011/12.
U.S. soybean production for 2012/13 was projected at 3.205 billion bushels, an increase from 2011/12 due to increased yields that will more than offset decreased harvested area. Average soybean yields in 2012/13 were projected up 2.4 bushels per acre to 43.9 bushels per acre. Supplies of domestic soybeans were estimated at 3.43 billion bushels, a 4.0% increase from 2011/12.
U.S. soybean exports in 2012/13 were estimated at 1.505 billion bushels, an increase of 190 million bushels from a year prior. The stocks-to-use ratio in 2012/13 was projected at a historically low rate of 4.4% due to the ending stocks estimate of 145 million bushels which was a 65 million bushel decrease from 2011/12. The 2012/13 average soybean price was projected at $12.00 to $14.00 per bushel.
Global production of soybeans in 2012/13 was projected to increase 15.0% to 271.4 million tons. Argentina and Brazil were estimated to increase production due to improved yields and a record harvested area.
We will continue to watch South American production as it will serve as a catalyst for expected U.S. exports.
U.S. wheat ending stocks for 2011/12 were adjusted down by 25 million bushels to 768 million bushels. The ending stocks adjustment came from an increase in 2011/12 U.S. wheat exports which increased by 25 million bushels to 1.25 billion bushels.
2012/13 projected production for U.S. wheat was at 2.245 billion bushels, the highest since 2008/09. Average yields were estimated at 45.7 bushels per acre, an increase of 2.0 bushels per acre from 2011/12. Wheat supplies for 2012/13 were projected up 5.0% to 3.133 billion bushels.
U.S. wheat exports for 2012/13 were expected to be 1.150 billion bushels, an increase of 125 million bushels from 2011/12. Ending stocks for 2012/13 were projected down 33 million bushels to 735 million. The season average wheat price for 2012/13 was projected lower than the 2011/12 price of $7.25, at $5.50 to $6.70 per bushel.
Global wheat supplies are expected to decrease in 2012/13 by 2.0% as U.S. increased production will more than offset a reduction in foreign production. Global wheat supplies in 2012/13 are projected at 677.6 million tons, a 17.1 million ton reduction from 2011/12.
We will be keeping a close eye on the progression of the historically early U.S. planting season. The balance sheet of U.S. corn will remain a hot topic as the amount of planted corn is projected to be the highest since before WWII and the U.S. has pre-sold a record amount of new crop corn thus far in 2012.
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