CME: USDA expects largest corn planting since 1944

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click image to zoom USDA released its Agricultural Projections to 2021, commonly known as the Baseline, on Monday. The document is released by by USDA’s Interagency Agricultural Projections Committee which is comprised of people from all of the major ag agencies. It is the federal government’s first stab at long-term supply, demand, trade and price levels and is based on November data. The document will be updated to some degree before USDA’s Agricultural Outlook Forum Feb. 23-24 in Washington, D.C.

In its Baseline, USDA expects planted corn acres to reach 94.0 million acres this spring, just short of the 94.2 million average estimate of analysts surveyed by Reuters last week. If planting reach that level, they will be the largest since 1944 and will eclipse 2007’s most recent high of 92.89 million acres. USDA’s Baseline further predicts that 86.8 million acres will be harvestd and has plugged a trend yield of 164 bushels per acre in for the time being. Our data indicate that the 164 yield is in line with the yield trend since the mid-1990s that covers the era of biotech, genetically enhanced corn varieties. The 50-year trend dating to 1961 would suggest a lower yield of 169.1 bushels per acre. The most notable difference between the two trends is that the longer-term one includes a number fo bad weather years where the “Biotech” trend does not.

USDA also increased feed and residual corn usage dramatically in the Baseline — to 5.225 billion bushels — for 2012-13. That compares to its forecast of only 4.6 billion this year — a 13.6% increase. We’re not sure what is going to eat all of that corn given current rates of change among the various grain consumer species.

Graphs showing USDA’s Baseline predictions for several key livestock and poultry variable appear at right. USDA expects a decline in broiler output in 2012 and then a resumption of “To infinity and beyond!” style growth. The projected rate of growth is slower than in the ‘80s and ‘90s but is about the same as the rate from 2000 through 2006. Beef output is forecast to fall the next two years before expanding and reaching record levels in 2017 and beyond. Pork production is expected to resume the constant but relatively slow growth path it has seen for most years since 2000. USDA projects total meat/poultry consumption to fall to under 198 pounds in 2013 before beginning to grow again. The Baseline says that consumption will grow back to 213 pounds by 2021. Note that it peaked at just over 221 pounds in the 2004-2007 period. We are a bit surprised by the size of USDA’s forecast increases in beef production given declining cow numbers and expected resource and land-use challenges. Per cap broiler consumption increases as output grows and actually returns to its 1986 levels in 2020. Pork consumption is forecast to remain within one pound of 47 pounds per person from 2012 onward.

Finally, the record-high prices of beef cattle will remain through 2014 before declining. Note that no annual average forecast for fed steers, though, is below $110/cwt. Hog prices are expected to remain very close to 2011 levels through 2014 before declining modestly. Note that USDA’s forecast for total pork production in 2021 is 13% larger than that of 2011 and 2021 exports are expected to be 1.1 billion pounds ( 22%) higher at 6.085 billion pounds, carcass weight.



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