Corn Commentary

Little Change in New Supply Demand Report

Projected 2012/13 U.S. corn ending stocks were unchanged from last month’s estimate in the World Agricultural Supply and Demand Estimate report out Friday, lowering exports but increasing feed use and keeping corn use for ethanol the same.

Corn exports were lowered 75 million bushels, imports were increased 25 million, and feed usage was increased by 100 million - due in part to “continued expansion in poultry production.” The projected season-average farm price for corn was lowered by 20 cents a bushel to $6.75-7.45.

Projected corn use for ethanol this season remains unchanged at 4.5 billion bushels, which is down 10 percent from last year on lower gasoline use, according to USDA Deputy Chief Economist Rob Johansson. “Obviously we expect that will increase towards the end of this year when the new crop comes in,” said Johansson.

Export projections were lowered by eight percent from last month “based on the slow pace of sales and shipments to date and stronger expected competition from South American corn and from competitively priced feed quality wheat.” But drought is the main reason the forecast of 850 million bushels for this year is nearly half last year’s total estimated 1.5 billion bushels in exports.

Weather is always the key variable when it comes to predicting global supply and demand for agricultural commodities but there is another variable in the mix that could also impact those estimates this year. USDA noted at the very top of the March report that “potential impacts of U.S. budget cuts are not reflected in today’s report.” Whether that may be due to sequestration or lack of funding for export promotion programs or a combination of cuts is not specified, but the final outcome right now seems to be just as unpredictable as the weather.