As farmers wrap up this year’s harvest, the U.S. corn market continues to be pressured by tight stocks and strong demand, according to economists with the American Farm Bureau Federation.
The USDA released its November crop report this week, showing a U.S. corn crop of 12.3 billion bushels, a reduction of 1 percent from the October estimate. USDA also forecasts a further tightening of corn supplies at 843 million bushels in its November report, compared to 866 million bushels in its October estimate.
“USDA estimates that this year’s corn crop will be the fourth largest ever and the U.S. will need every bushel of corn produced to meet the need for food and fuel and to rebuild supplies to a more comfortable level,” said AFBF crops economist Todd Davis. “The story for 2012 will be the same as 2011. The U.S. will need more acreage, good yields and a bigger crop next year to meet demand and build supplies.”
The estimated amount of corn used by the livestock and poultry industries also was lowered. “USDA again reduced estimated feed and residual usage by 100 million bushels,” according to the CME Daily Livestock Report. “This month’s figure of 4.6 billion bushels is 4 percent lower than last year and 10 percent lower than in 2009-10. We remain doubtful that feed usage can fall by this much for the coming crop year.”
Some industry observers point to the increase in distillers’ dried grains with solubles as a factor. “However, adding back in net DDGS supply and counting the DDGS as a straight corn substitute, the total corn plus DDGS available this year is 4 percent lower than last year and 9.7 percent lower than the year before,” according the CME report authors Steve Meyer and Len Steiner.
USDA forecasts an average U.S. yield of 146.7 bushels per acre in its November report, which would be the lowest average yield since 2003. Davis believes a factor in the yield decline was early frost in the northern tier of the Corn Belt, which reduced yields by 5 bushels per acre in Minnesota and 11 bushels per acre in North Dakota, compared to October.
Davis said USDA’s November estimate is based on harvest surveys conducted from Oct. 25 to Nov. 4 and does not represent the total U.S. harvest because farmers in the eastern Corn Belt are still harvesting their crop. USDA’s next and final estimate of the 2011 corn crop will be released in January and will include numbers on the total U.S. crop, according to Davis.
“When USDA conducted its November survey, just 34 percent of the Ohio corn crop and 41 percent of the Michigan corn crop was harvested, so there is a good chance that yields and production will decrease from this month’s estimate,” Davis said. “A smaller crop will place further strain on already tight stocks and support higher prices.”
Source: AFBF, CME Daily Livestock Report