China's Corn Supply Less Than Reported

China's domestic supply of corn appears to be quite a bit less than estimated, as local and regional farmers, apparently in an attempt to boost their status with the Chinese government appear to have overestimated the corn harvest in the country.

Both the Chinese government and the USDA said the country had produced a record crop of 191.8 million tons in 2011, but that appears to be anywhere from 6.8 million tons to 24 million tons less than the actual corn production numbers.

Domestic Chinese corn has already started to jump in price in response to government agencies and private producers bidding for the grain in the tighter-than-expected market.

Originally the USDA estimated China's corn imports at about 4 million tons, assuming the accuracy of the 191.8 million ton figure. That could, and probably will change significantly as the situation unfolds. Some estimate that corn production in China for 2011 may be as low as 168 million tons.

China has officially come out and said they have enough corn reserves and won't need to import a lot of corn for 2012, but that could be a negotiating ploy to keep corn prices somewhat stable as demand ramps up.

Even so, and with the drought pressuring corn supply in Brazil and Argentina, China can easily enough shift to importing wheat as a secondary choice if corn prices rise too high, waiting for an opportune time when the price pulls back. It'll be an interesting year for corn imports and exports around the world, including the United States.

Argentina, Brazil Corn Production May Exceed Estimates

Corn production estimates last month by the U.S. Department of Agriculture for Argentina and Brazil may have been understated, as a report from Informa Economics on March 2 said.

Drought in both countries resulted in the USDA projection a 22 million ton harvest in Argentina and a 61 million ton harvest in Brazil. According to Informa, those numbers could reach 22.5 million tons of corn harvested in Argentina and 61.5 million tons or corn harvested in Brazil for 2012.

Offsetting that data was the news South Korea’s Nonghyup Feed Inc., the largest buyer of feed grains in the country, acquired 126,000 metric tons of U.S. corn on March second, which is scheduled for July delivery.

That has helped push up the price of corn futures slightly in Monday trading.

Corn Stockpile Estimates Cut by USDA for 2012

Projections for corn stockpiles in the United States has been lowered by the U.S. Department of Agriculture for 2012.

The downwardly revised U.S. corn stockpile estimates come from the continuing dry weather in South America, especially Argentina, which will probably result in inventories being down because of exports going up as countries gravitate to the American corn supply to make up for the shrinking South American corn yield.

Officials at the USDA slashed expected 2012 domestic corn inventory to 801 million bushels, a drop of 5.3 percent.

Argentina corn production estimates were cut by the USDA to 22 million metric tons, a decline of 15 percent. Brazil, which analysts had believed would also have corn production estimates lowered by the USDA, was kept the same, although that could be downwardly revised as the impact of weather conditions on the corn yield are clearer.

Since the middle of December, corn prices have climbed about 10 percent, in response to the first news reports dry weather was having a significant impact on the South American corn crop.

The second-largest producer of corn in the world, behind the United States, is Argentina.

U.S. Corn Farmers to Plant Large Acreage Say Analysts

In a Reuters poll of 24 analysts, consensus is U.S. farmers will plant the largest amount of acres in corn in 68 years. Expectations are a faster than usual planting because of mild and drier weather will help raise the corn acreage planted.

Estimates are a total of 94.2 million acres will be planted, which could result in a record crop of 13.8 billion bushels produced, based upon a yield of 161.4 bushels an acre. The previous record is 13.1 billion bushels.

If the estimates are accurate, it'll be the largest amount of acreage planted in corn since 1944.

Some think the higher corn planting estimates are premature, citing farmers who haven't made a decision yet on whether to go with soybeans or corn. Corn is expected to be more profitable, but also has higher input costs.

Most believe higher corn prices are sustainable, which should drive up the earnings per acre by about $100 more than soybeans, matching performance over the last three years.

That assumption is based upon low supply and high demand. The drought in Argentina is also considered a major support for corn prices this year, and a reason for U.S. farmers boosting the number of acres planted.

The thought is if corn is above $6.50 a bushel, farmers will plant more acreage in 2012.

Argentine Corn Farmers Hit by Heat Wave

The effects of La Nina continue to wreak havoc in Argentina, as well as Mexico and Brazil, as corn farmers in Argentina could lose up to 33 percent of the corn for the 2011-2012 season.

Already struggling from recent drought conditions, the projections are the corn in the Pampas agricultural zone will experience drought conditions through February 2.

Expected tempertures are expected to go above the 104 degrees Fahrenheit in parts of the region, with little rain expected to dampen things down.

Rick Tolman, chief executive officer of the National Corn Growers Association, said this in Buenos Aires, “It looks very similar to what we experienced in 2011." He added that the rain “seemed to be timely enough to help the soybean yields, but for a lot of the corn, it may be too little, too late.”

The worst case scenario for Argentina could result in the harvest dropping to as low as 20 million tons, 10 million less than the 30 million projected.

For the December through March season, the estimated corn havest was cut from 7.4 million tons to 6.1 million tons. The soybean harvest estimates were slashed from 14.1 million tons to 11.7 million tons during the same period.

Dry Weather in Argentina Pushed Corn Prices Up Slightly

Dry weather in Argentina gave corn prices a boost today, after falling to their lowest level in a month yesterday. Argentina is only second behind the U.S. in exporting of corn.

Projections are the conditions in Argentina will continue, as expectations are that less than 1 inch of rain will fall in the major agricultural regions of Argentina over the next couple of weeks.

Corn responded by moving up as high as $3.695 a bushel on the Chicago Board of Trade in electronic trade, while closing at $3.66-1/2 a bushel.

Argentina Farmer Strike Causes Corn to Rise to Allowed Limits

After an export tax increase in Argentina, farmers protested by blocking ports and asserting they'll plant less crops this year than in the past - including corn.

The strike shut things down so completely that only 19 trucks entered the port of Rosario, according to reports, when a usual day in March can have up to 6,000 trucks delivering goods to the port. Rosario accounts for about 60 percent of the grain exported out of Argentina.

The protest is actually in reference to increases in export taxes on soybeans and sunflowers seeds, which was increased to around 44 percent from the 35 percent last week.

As a result, the possibility that exports for Argentina could be cut back, caused prices to rise as high as they're allowed for corn by the Chicago Board of Trade.

May delivery of corn futures rose by 20 cents, to reach $5.4475 a bushel, or 3.8 percent.

Over the last year, corn prices have risen by 35 percent and attained a record on March 11 of $5.795 a bushel.

Another factor causing the increase of corn prices is the weather in the U.S., which has been extremely wet in the eastern portion of the midwest, which is causing farmers to delay planting. It looks like the wet conditions will continue on for some time in some parts of this region of the country.

Finally of course, the artificially created market for ethanol continues to put pressures on corn prices, as the unproven fuel continues to reek havoc in the markets.

All this combined makes the price of corn likely to continue increasing in price over the next several months.