USDA Just Cut Global Corn Supply 10%!
If anyone had any doubt about corn prices and all grain prices holding up through planting season, the nails just got pounded in their coffin! Demand for fertility products will be greater than we have seen in farmer’s lifetimes.
Kipp
Here is a summary of what was reported this morning:
Feb. 9 (Bloomberg) -- U.S. stockpiles of corn before the next harvest will be 9.4 percent smaller than estimated last month, a bigger drop than expected, because of increased ethanol production, the government said.
The surplus on Aug. 31, the end of the marketing year, will be 675 million bushels, down from 745 million forecast in January and less than 1.708 billion on hand a year earlier, the U.S. Department of Agriculture said today in a report. Analysts surveyed by Bloomberg News expected 729 million bushels, on average. Corn prices have jumped 89 percent in the past year.
“The function of the market could be to trade higher to ration demand,” Dan Cekander, the director of grain research for Newedge USA LLC in Chicago, said before the report. The rally also will help to “encourage a large expansion in planted acreage,” he said.
Corn futures for March delivery fell 1 cent yesterday to close at $6.7375 a bushel on the Chicago Board of Trade. The price has surged in the past year as adverse weather reduced global production.
The ratio of U.S. corn inventories to usage will drop to 5 percent, matching a low set in the 1995-1996 marketing year, the USDA said.
Reduced corn supplies may increase expenses for meat companies such as Tyson Foods Inc. and Smithfield Foods Inc. Makers of corn-based ethanol such as Valero Energy Corp., Poet LLC and Archer Daniels Midland Co. may see margins squeezed.
Ethanol Production
A record 4.95 billion bushels will be used to make ethanol, up from 4.568 billion last year, the department said. In January, the USDA forecast ethanol production would consume 4.9 billion bushels.
About 1.95 billion bushels will be exported in the marketing year that ends Aug. 31, unchanged from January’s estimate and less than the 1.987 billion in the previous marketing year, the USDA said.
The amount of corn used in livestock feed will rise to 5.2 billion bushels from 5.14 billion estimated for the 2009-2010 year, the department said.
The USDA estimated world production in the 2010-2011 season, which began Oct. 1, at 814.26 million metric tons, down from 816.01 million forecast in January because of dry weather in Argentina. That compares with a record 812.34 million tons harvested last season.
China Production
China, the second-largest producer, will harvest 168 million tons, unchanged from last month, the USDA said. The forecast for China’s imports was left unchanged at 1 million tons, compared with 1.3 million tons last year.
Global consumption will reach 836.9 million tons, up from 836.12 million estimated last month and more than 815.01 million last year, the USDA said. It would be the second straight year world consumption exceeds output.
World inventories before next year’s harvest will total 122.51 million tons, down from 127 million estimated in January and from 145.16 million last year. Analysts surveyed by Bloomberg News expected stockpiles of 125.4 million, on average.
--Editors: Daniel Enoch, Patrick McKiernan.
