An analysis of U.S. and World Corn and Grain Sorghum supply-demand factors and price prospects has been placed up on the KSU AgManager website (http://www.agmanager.info/default.asp).
Following is a summary – with the full analysis-article for Corn and Grain Sorghum to be found here.
Corn: In its October 11th USDA Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports, the USDA projected marginally lower 2012 U.S. corn production along with tightening supply-demand balances for both the “old crop” 2011/12 and “new crop” 2012/13 marketing years. Sharp increases in estimated corn feeding in the summer of 2012 together with a moderate increase in non-ethanol food, seed and industrial usage lead to sharply lower U.S. corn ending stocks in “old crop” MY 2011/12. This in turn led to reduced beginning stocks and tighter supplies for U.S. corn in the “new crop” 2012/13 marketing year.
Drought-induced shortfalls in 2012 U.S. corn production has led to expectations of severe price rationing of U.S. corn use in “new crop” MY 2012/13, with projections of lower year-over-year usage of corn for a) ethanol, b) non-ethanol food seed and industrial use, c) exports, and d) feed and residual usage. Lower beginning stocks (988 million bushel or “mb) and marginally lower 2012 U.S. corn production (10.706 billion bushels or bb) more than offset lower exports to cause ending stocks (619 mb) and % ending stocks-to-use (5.6%) to be lowered appreciably for “new crop” MY 2012/13. This level of U.S. ending stocks-to-use (5.6%) would be the second tightest since the record low of 5.0% in MY 1995/96.
Although reduced marginally from the previous WASDE report, U.S. corn prices of $7.10-$8.50 in “new crop” MY 2012/13 are still forecast to be at record highs. Given the predominance of U.S. corn production in World feedgrain markets, U.S. corn prices are likely to continue to remain high through the coming fall, winter, spring and early summer months – until U.S. corn acreage, yield and production prospects for 2013 become more clear.
Grain Sorghum: The USDA made a limited changes in its earlier projections for “new crop” MY 2012/13 and “old crop” MY 2011/12 U.S. grain sorghum supply-demand balances and prices. Projected 2012 U.S. grain sorghum yields and production were raised marginally, leading to a small increase in ending stocks and ending stocks-to-use projections for “new crop” MY 2012/13. Small changes were also made in feed and residual use and exports in the “old crop” MY 2011/12 supply-demand balance sheet. The projected “new crop” MY 2012/13 U.S. average farm price for grain sorghum of $6.70-$8.10 /bu is record high – following U.S. corn price projections.
World Corn and Coarse Grains: Projected “new crop” MY 2012/13 World corn ending stocks-to-use of 13.7% are the second tightest since MY 1973/74, behind only 11.8% in MY 1984/85. Reduced production prospects for U.S. and foreign corn and other coarse grains and price rationing of World coarse grain usage have become key drivers of World coarse grain supply-demand balances and market prices.
The focus of corn and broader coarse grain markets in coming months will likely be on corn acreage and production prospects in Brazil and Argentina. If these countries have successful planting and crop development for their 2013 corn crops, it may alleviate some of the coarse grain market pressure and uncertainty surrounding 2013 U.S. feedgrain acreage and production prospects in this coming spring. Also, potential threats to World and U.S. wheat production would have cross market impacts upon World coarse grain markets as wheat is a widely used livestock feed substitute for corn in many foreign and domestic livestock feed markets.