U.S. corn stockpiles at the beginning of December were nearly 7 percent smaller than a year earlier after ethanol producers ramped up to record levels and the 2011 harvest fell short of expectations, according to grain market analysts.
Nationwide corn supplies totaled 9.39 billion bushels as of Dec. 1, based on a survey of 17 analysts conducted by Thomson Reuters ahead of the U.S. Department of Agriculture’s quarterly Grain Stocks report, scheduled for Jan. 12. A year earlier, there were 10.06 billion bushels on hand.
The USDA’s stocks number likely will reinforce the outlook for historically tight corn inventories and high feed costs for beef, dairy and pork producers this year. Corn supplies will be among several closely-followed numbers in four USDA reports scheduled to be released Jan. 12.
Many analysts also expect the USDA to trim slightly the size of the 2011 U.S. corn harvest and cut estimates for South America’s corn and soybean harvest after extreme heat and dryness hurt crops over the past couple months.
The following are brief summaries of trade expectations for the four USDA reports:
After corn inventories came out unexpectedly high in the USDA’s previous quarterly report in September, analysts are wary of a potential bullish surprise.
Corn supplies as of Sept. 1 totaled 1.13 billion bushels, the USDA said at the end of that month, 17 percent higher than the average analyst estimate. But many analysts were skeptical of the USDA’s Sept. 1 figure, saying supplies couldn’t possibly be that large in light of smaller crops. Grain stocks, according to analyst Jason ward, is the “big wild card” of the Jan. 12 reports.
The USDA “has been kicking a 300-million-bushel error down the road for many reports now,” Ward said in an e-mail. He’s with Northstar Commodity Investment Co. in Minneapolis.
After USDA analysts added to corn stocks in September, “many believe they will take it away in this report,” Ward said. It’s “obviously bullish” for prices if that happens.
If supplies were as large as the USDA reported, “where is all the corn?” Ward said. “We have elevators searching for corn and farmers can’t hold that much old crop and new crop as well, can they?”
The USDA is expected to make further cuts in what is expected to be the agency’s final adjustments for the 2011 corn crop.
U.S. farmers harvested about 12.27 billion bushels of corn last year, according to the Reuters survey, down from the USDA’s previous estimate, 12.31 billion bushels, released in November. The crop would be 1.4 percent below the 12.45 billion bushels harvested in 2010, based on the survey.