Trade reports about the size of further reductions are in a wide range, but center on about 150 million bushels. Add in uncertainty about Chinese demand, the on-going drought in parts of Mexico, and the likely implications of possible freeze damage to wheat crops in Eastern Europe and the Ukraine and the U.S export picture becomes murkier.
While uncertain, the level of year-ending U.S. corn stocks will be small, increasing the importance of the size of the 2012 crop. Production expectations begin with planted acreage. Corn acreage is generally expected to increase by 2 to 3 million acres due to prospects for less prevented plantings and the relatively high price of corn. Area harvested for grain, then, could increase by 3 to 4 million acres.
The default yield expectation centers on trend value, but there are widely differing opinions about trend value. Deviation from trend will depend on planting and growing season weather. Current concerns center on soil moisture deficits in the southern Plains, in the Southeast, and more recently in western Iowa and southern Minnesota. While probabilities favor a much larger corn crop in 2012, likely production will remain unknown for several more months.
The mixed fundamental picture for corn results in a wide range of price expectations and complicates marketing decisions for producers. This type of environment favors spreading sales of remaining old crop inventories over the next few months. For now it appears that the recent wide trading range (about $5.75 to $6.75 for March futures) will persist, with prices in the upper part of the range providing opportunities for incremental sales.