Corn Supplies Tight on Record Demand

Corn and soybean supplies will remain tight this year even as increased plantings set the stage for record or near-record harvests, U.S. Department of Agriculture chief economist Joe Glauber said Feb. 24.

Exports and ethanol demand are expected to grow, keeping corn prices near historic highs and squeezing profit margins for beef, dairy and pork producers, Glauber said during an address at the USDA’s annual Outlook Forum in Arlington, Va.

“Unless this year’s weather is better than normal or plantings increase more than expected, stock levels for corn and soybeans should see only modest rebuilding in 2011-12,” Glauber said. “This will likely mean continued volatility in those markets.”

Corn futures in Chicago rallied 52 percent last year as the U.S. harvest produced weaker than expected results and prices continued higher in 2011, reaching a 31-month high near $7.25 a bushel earlier this week.

Rapidly escalating feed costs are an increasing concern for beef and pork producers, who in early 2010 returned to profitability after the 2008-09 recession contributed to deep losses.






Full Story

Corn Up on Farmers Withholding Supplies

Farmers in the U.S. have been withholding corn and cash premiums have risen as a result. Demand overseas has increased in the mix as well.

“Farmers are beginning to let loose of some corn and soybeans, but the pipeline supplies have not been replenished” to load ships, said Ron Uhe, a risk consultant for Mid-Co Commodities Inc. “We have a battle for supplies between processors and exporters.”

The corn premium surpassed September futures, increasing by 40 cents to 45 cents a bushel, in contrast to 40 cents to 43 cents a bushel.

Corn futures for September delivery increased 7.25 cents, or 1.9 percent, to $3.855 a bushel.

Smaller Herds Drive Corn Prices Down, Along with Oversupply

Corn surpluses continue to plague the industry as an abundance of corn has flooded the market, while smaller herds has lowered demand.

The ongoing weight of oversupply continues to dominate the price of corn, and it makes you wonder why farmers continue to plant it at such high levels, knowing the supply is outstripping demand.

Corn inventories are at their highest levels since 1987, with an 11 percent increase for the year, reaching 7.694 billion bushels as of March 1.

For the year, expectations from the USDA are corn production should reach 13.131 bushels from the 2009 crop.

Corn News | Corn Production and Ending Stocks Projections Lowered by Analysts

Corn News

Ahead of the soon to be released USDA supply and demand report, McHenry, Illinois based analysts Allendale Inc. expect the Ag Department to lower its production and new crop ending stocks estimates for corn.

Allendale sees 2009/10 corn stocks at 1.015 billion bushels and production at 11.935 billion bushels because of delayed planting. Allendale also sees the USDA cutting the average yield estimate by 2 bushels per acre. In May, the USDA put corn production at 12.090 billion bushels and new crop stocks at 1.145 billion bushels. Allendale pegs old crop corn ending stocks at 1.610 billion bushels, up 10 million from May.

Allendale expects USDA to leave the soybean production guess unchanged from May at 3.195 billion bushels, but sees old crop stocks at 99 million bushels due to strong demand; the USDA's May 2008/09 ending stocks estimate was 130 million bushels. Also, Allendale sees 2009/10 soybean stocks at 243 million bushels, compared to 230 million in May's update.

2009 U.S. wheat production is projected at 1.993 billion bushels, compared to May's estimate of 2.026 billion. Winter wheat is placed at 1.492 billion bushels, with hard red at 864 million, soft red at 417 million and white winter at 211 million. In May, the USDA had wheat production at a total of 2.026 billion bushels, with the winter crop at 1.502 billion, hard red at 871 million, soft red at 422 million and white at 208 million.

The USDA will also be issuing updated world supply and demand figures. The reports are due out Wednesday, June 10 at 7:30 AM Central.

Corn News