Today, the USDA released the May World Agricultural Supply and Demand Estimates (WASDE) report and the May Crop Production report. The WASDE report, which included the first forecasts for the 2012-2013 marketing year, contained some very bearish projections for corn, but the soybean and wheat forecasts have mixed implications. Following is a brief summary of the new forecasts.
For the current marketing year, the projection of U.S. feed and residual use of corn was reduced by 50 million bushels to a total of only 4.55 billion bushels. Analysts expect more wheat feeding this summer and an early harvest of the 2012 corn crop to reduce summer feed demand for corn. Year ending stocks are projected at 851 million bushels. The projected size of the current Argentine corn harvest was unchanged from the forecast of last month, while the projected size of the Brazilian crop was increased by almost 200 million bushels (8 percent). The projection of world marketing year ending stocks was increased by 190 million bushels.
For the 2012-13 marketing year, the USDA forecast a record high U.S. average yield of 166 bushels. That forecast is based on the linear trend of yields from 1990 through 2010 adjusted up by 2 bushels due to the expected positive impact of early planting. Production is forecast at 14.79 billion bushels, 2.432 billion larger than the 2011 crop. Feed and residual use of corn is projected to increase by 900 million bushels during the year ahead due to lower prices and a jump in residual use due to the size of the crop. Exports are expected to increase by 200 million bushels, to 1.9 billion, while ethanol use is expected to be unchanged at 5 billion bushels. Year-ending stocks are projected at 1.881 billion bushels and the 2012-13 marketing-year average price is expected to be in a range of $4.20 to $5.00, compared to $6.10 for the current year.
The USDA also sees an increase in corn production next year in Argentina, South Africa, Mexico, Canada, China, and the Ukraine. World stocks at the end of next year are expected to be 975 million bushels (19 percent) larger than stocks at the beginning of the year.
For the current marketing year, the projection of the domestic crush was increased by 15 million bushels and the projection of exports was increased by 25 million bushels, leaving the projection of ending stocks at 210 million bushels. The projected size of the current Argentine harvest was reduced by 92 million bushels and the Brazilian estimate dropped by 37 million bushels, further tightening the projection of year-ending world stocks.