“The pace of corn consumption has also accelerated as the 2012-13 marketing year winds down,” Good said. “Based on weekly estimates of ethanol production, it appears that corn used for ethanol and co-product production during the last quarter of the marketing year will be 40 to 45 million bushels more than used during the summer quarter last year. If so, use for the entire marketing year will exceed last week’s USDA forecast by 30 to 35 million bushels,” he said.
According to Good, the recent pace of exports of U.S. corn has also been a little higher than expected, averaging 12.55 million bushels per week in the six weeks ended Aug.15. The USDA raised the forecast of 2012-13 marketing-year exports by 15 million bushels, to a total of 715 million, in last week’s World Agricultural Supply and Demand Estimates Report. With just over two weeks left in the marketing year, cumulative export inspections are reported at 666 million bushels, suggesting that inspections need to average 21.3 million bushels per week in the last 2.3 weeks of the year to reach that projection. However, through the first 10 months of the marketing year, the cumulative Census Bureau export estimate exceeded inspections by 27 million bushels.
“If that margin persists through August, weekly shipments need to average less than 10 million bushels per week,” Good said. “It appears that exports will reach the projected level.”
To reach the USDA forecast of feed and residual use for the 2012-13 marketing year, Good said that use during the last quarter of the year needs to total only 382 million bushels. That is 60 million bushels more than were used during the summer quarter last year when an estimated 1.2 billion bushels of new-crop corn were harvested before Sept. 1. However, the required use is 90 million bushels less the average summer use in 2010 and 2011. It appears that use could exceed the USDA projection, leaving the inventory of old-crop corn on Sept. 1 less than the current forecast of 719 million bushels.
“Taken together, recent developments suggest that new-crop corn prices may have established a low before harvest,” Good said. “At least, the extreme lows that have been reflected in some private forecasts now seem unlikely. The Sept. 12 USDA Crop Production Report looms as very important for price direction,” he said.