In the international picture, corn faces strong competition from feed wheat from former Soviet republics (FSU) that harvested much better crops than a year ago. Also, the Ukraine will be a moderate corn exporter. World wheat stocks at the end of the current marketing year are projected to be a fully adequate 15.6 weeks’ supply. Ending stocks are projected to be 6.47 million tons higher than a year earlier, with China and FSU stocks up 8.77 million tons. In other words, China and FSU account for essentially all of the projected increase in global wheat stocks. Forty six percent of global stocks are projected to be held by China and FSU, where the accuracy of stocks is questionable.
Global corn stocks are projected to decline by 10% or 590 million bushels, to a tight 8 weeks’ supply. Forty one percent of these stocks are projected to be held by China. China will want to continue holding large stocks as a reserve against possible weather-induced short crops. Also note that accuracy of Chinese corn stocks is questionable.
Official USDA and Chinese government projections indicate China had a record 2011 corn crop and has adequate corn supplies. However reports from Chinese grain trade sources and the U.S. Grains Council continue to indicate China is likely to be a significant corn importer this season. At this writing, USDA reports their total 2011-crop purchases of U.S. corn at 88 million bushels, 616% above a year earlier.
The largest source of competition for U.S. corn is South America. Projections in USDA’s November 9 World Crop Supply-Demand report show moderately increased corn production for that region next spring, assuming normal weather. However, as a caution in South American crop prospects, weather specialists indicate a La Niňa weather pattern is present and could possibly intensify in the months ahead. Note from Figure 2 that Argentine and Brazilian corn production were reduced significantly by a La Niňa drought in 2008-09. A repeat of 2008-09 weather in the South American growing season could increase export demand for U.S. corn in the last 2/3 of the current marketing year. China also is reported to have an agreement to import two to three million tons of Argentine corn (80-120 million bushels) that normally would be shipped to other countries.
Based on estimated and projected foreign crops, we expect U.S. corn exports for the current marketing year to be 9 to 11% lower than last season but slightly higher than the latest USDA projection. U.S. corn export sales to date are up 1.2% from a year earlier. Eleven weeks into the new marketing year, an unusually high 53% of USDA’s projected marketing year total exports is already sold. Crop prospects in South America and Chinese purchasing activity should be carefully monitored in the next three months for updated indications of export demand. Larger exports than currently projected would necessitate a further reduction in domestic corn feeding.