When USDA increased estimated 2011-12 corn carryover to 1.181 billion bu. in the Sept. 12 Supply & Demand Report, our initial reaction was the higher-than-expected ending stocks would reduce the risk of a “September Surprise” in the Quarterly Grain Stocks Report.
That’s because USDA’s World Ag Outlook Board (WOAB) cut 2011-12 corn feed and residual demand by 150 million bu. to reflect the use of 2012-crop corn harvested before September 1. Use of new-crop corn in the old-crop marketing year resulted in Sept. 1, 2010, corn stocks about 300 million bu. above pre-report trade expectations. A year later, Sept. 1, 2011, corn stocks were about 150 million bu. above the average pre-report trade estimate for the same reason.
Risk even higher in 2012 —
The 2012 corn crop was planted early, matured quickly and is being harvested at a record-fast pace. USDA’s Crop Progress Report (state-level data) suggests that nearly 1.2 billion bushels of corn was harvested before September 1. In 2010, USDA analysis suggests just over 600 million bu. were harvested by Sept. 1; by Sept. 1, 2011, only about 475 million bu. were harvested.
To recap: Just over 600 million bu. of corn harvested by Sept. 1, 2010, resulted in a September Surprise of an “extra” 300 million bu. of corn. In 2011, about 475 million bu. of corn was harvested by Sept. 1 for a 150-million-bu. September Surprise.
So... if nearly 1.2 billion bu. of corn were harvested by Sept. 1, 2012, it’s easy to imagine an old-crop corn estimate close to 1.4 billion bu. in the Sept. 28 Quarterly Grain Stocks Report.
Perspective: Obviously, this would be price-negative for old- and new-crop corn. To offset that risk, we’re looking to increase old- and new-crop sales ahead of the Grain Stocks Report.
