The April World Agricultural Supply and Demand Estimates (WASDE) report released this week by the Agriculture Department forecast tight corn and soybean stocks for the United States, confirming the ongoing impact of the extensive drought of 2012, according to analysis by the American Farm Bureau Federation (AFBF).
This month’s WASDE report estimated an increase in 2012-13 corn ending stocks; however, the increase was not as drastic as predicted in the March stocks report. AFBF economist Todd Davis says the stocks report found 400 million bushels more corn than the pre-stocks report forecast. The WASDE report showed ending stocks at 757 million bushels, up only 125 million bushels from the March estimate. And although the projected corn stocks are up slightly from the March projection the stocks-to-use ratio is still straggling, at 6.8%.
“There is not a large buffer of corn available to withstand weather or other production related problems for this year’s crop,” Davis says. “Planting will start in the Midwest in the next few weeks, and the latest report, if realized, shows ending stocks to be the smallest since 1995-96.”
The USDA reduced feed and residual use by 150 million bushels but increased the corn for ethanol demand by 50 million bushels to 4.55 billion bushels. Davis says an expected element of the report is the decrease in export use.
“USDA lowered export use predictions by 25 million bushels to 800 million. That is a 48-percent decrease from the 2011-12 marketing year, and if realized, would be the lowest corn export since 1971-72,” Davis says. “This is a reflection of our already elevated corn prices.”
While corn showed an increase in ending stocks, the report left soybean ending stocks unchanged from the March estimate of 125 million bushels, despite the pre-reports indicating a slight increase. The stocks-to-use ratio for soybeans is tighter than corn at 4.1%, and there is approximately 15 days of soybean supply on hand on Sept. 1.
Davis says wheat, corn and soybean world-ending stocks increased from the March estimates.
“The majority of world wheat and corn increases will come from China,” Davis says. “The increase in the world soybean crop will come from South America. Both Brazil and Argentina rebounded from drought and are expected to handle much of the world demand until the United States can harvest and become competitive again.”
The May WASDE report will be released May 10 and will provide the first supply and demand projections for the 2013 crop.
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