Lack of movement in year-end corn stocks puzzles market
By Sara Wyant
© Copyright Agri-Pulse Communications, Inc.
WASHINGTON, April 11, 2012 -Some market-watchers were scratching their heads Tuesday after Agriculture Department forecasters made no changes to their U.S. corn balance sheet in the April Supply & Demand report. Private analysts had anticipated as much as a 100 million bushel reduction in projected year-end stocks of corn based on USDA's smaller-than-expected quarterly grain stocks estimate released on March 30. Instead, corn carryout was unchanged at 801 million bushels. Demand for corn for livestock feed, ethanol and export was steady.
“I was surprised that [USDA] didn't account for the much smaller than expected March stocks figure,” Mike Kruger, president of The Money Farm, said on a post-report media call hosted by the Minneapolis Grain Exchange.
Part of the reason the lower stocks number didn't automatically translate to a drawdown in 2011-12 carryout is because the 2012 crop is going into the ground quickly, particularly in the southern United States.
“The quick start to corn planting this spring and more intended acres across the South raise the potential for a substantial increase in new-crop corn use before the September 1 start of the new marketing year,” USDA explained.
Nationally, farmers had planted a record 7% of their corn acres by Sunday, USDA said in a weekly update.
The S & D report also projected more livestock feeding of wheat instead of corn, which will reduce the amount of corn used for that purpose.
Soybeans were clearly the newsmaker in the latest report. U.S. ending stocks were reduced 25 million bushels to 250 million. The decline was due to an increase in expected crush and exports to make up drought-shortened harvests in South America. The current season-average price forecast was raised 25 cents per bushel to $12.25.
USDA further trimmed its soybean production estimates for Brazil and Argentina - the world's second- and third-largest producers after the United States - by a combined 4-million metric tons, to 111 MMT.
Pencil in 1 million fewer U.S. acres planted to soybeans this spring, according to Todd Davis, an economist with the American Farm Bureau Federation, “We are looking at a situation where soybeans, rather than corn, could very well become the market leader in the U.S. grain and oilseed complex.”
Kruger agreed. “People are already saying that if you flow those numbers through ‑ even with good U.S. yields - into the end of the next marketing year and assume that China's demand is going to be a little bit higher in 2012-13 . . . they're looking at a significant tightening in U.S. soy supplies,” Kruger said.
Old-crop wheat ending stocks, meanwhile, were lowered 32 million bushels to 793 million.
Original story printed in April 11th, 2012 Agri-Pulse Newsletter.
For more news visit: www.Agri-Pulse.com