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Corn Supply Slightly Lowered


On Feb. 9, USDA released the latest World Agriculture Supply and Demand Estimates (WASDE) Report, which showed slightly lower expected U.S. corn ending stocks for 2011-2012, compared to the January estimates. The projected 2011-12 corn ending stocks are now projected at 801 million bushels, as compared to 846 million bushels in the January USDA estimate. The change came in the form of expected increased demand in corn exports for 2011-2012. The all important corn stocks-to-use ratio for 2011-2012 is expected to be down to near 6.3% by the end of the current marketing year, which is slightly higher than the lowest ever stocks-to-use percentage of 5% in 1995-1996. That will put the corn stocks down to only 23 days of usage, which is quite tight. By comparison, corn ending stocks at the end of 2010-2011 marketing year, were just over 1.1 billion bushels of corn.

The very tight corn supplies are a combination of reduced corn yields in some portions of the Corn Belt in 2010 and 2011, which lowered the overall U.S. corn production, and slightly increasing corn export demand for the current marketing year. Total corn production dropped from 13.1 billion bushels in 2009 to near 12.4 billion bushels in both 2010 and 2011. Corn export demand for 2011-2012 is now estimated at 1.7 billion bushels, which is an increase of 50 million bushels from the January estimate, but is still below the 1.83 billion bushels of corn exports in 2010-2011. Total corn usage in the U.S. for 2011-2012 is now estimated at about 12.7 billion bushels, as compared just over 13 billion bushels in both 2010-2011 and 2009-2010. The latest WADSE report held expected corn usage for ethanol production, feed usage, and food production steady with January estimates.

There was very little response in the corn markets from the tighter corn supplies being projected in the latest report by USDA. Most analysts felt that the corn market had already factored in the tighter supplies and increased export demand. Many analysts are projecting 94-95 million acres of planted corn for 2012, compared to 91.9 million acres last year. The expected increase in corn acreage continues to put pressure on the markets, even though projected corn stocks are at very tight levels. If the USDA March Planting Intentions Report comes out with higher than expected planted corn acres, it could place additional pressure on the corn market. Higher corn acreage in 2012, along with normal to above normal yields, could lead to some downward pressure on the corn market later in 2012.

Current poor weather conditions in Argentina may reduce the corn crop there, which could further increase export demand for U.S. corn, and lead to some short-term price enhancement. Many parts of the Upper Midwest have extremely dry soil conditions, which also could be an upward factor on the corn market, if this condition persists into the 2012 growing season. USDA is currently estimating U.S. on-farm corn prices for 2011-2012 marketing year in a range of $5.80-6.60/bu., or and average of $6.20/bu. The 2011-2012 marketing year runs from Sept. 1, 2011 through Aug. 31, 2012.

The Feb. 9 WASDE Report released by USDA left the expected soybean carryover for 2011-2012 at 275 million bushels, which is unchanged from the January estimate. This compares to soybean ending stocks of 215 million bushels for 2010-2011 and 151 million bushels for 2009-2010. The estimated total soybean usage for 2011-2012 is 3.01 billion bushels, which is down from 3.28 billion bushels in 2010-2011, with estimated soybean exports reduced by 275 million bushels from a year earlier. Potential weather problems in South America, and the dry weather in the Upper Midwest, could potentially strengthen the soybean market in the coming months; however, favorable weather in the U.S. could pressure soybean markets later in 2012. USDA is now estimating on-farm soybean market prices for the 2011-2012 marketing year in a range of $11.10-12.30/bu., or an average of $11.70/bu.


Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at

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