Demand bullish, world stocks bearish to corn
In 2006, planted corn acres were 78.6 million, Allendale's most recent corn acreage estimate for 2007 is 87.2 million, Informa's estimate released Thursday is 85.922 million. 2006 planted soybean acres were 75.6 million, Allendale's 2007 estimate is 69.6 million with Informa's estimate of 70.434 million. Winter wheat acres planted a year ago were 40.1 million, Allendale's estimate is 43.3 million with Informa's estimate at 44 million.
Swing states to keep an eye are those in the north central Midwest, already finding it difficult to secure short season corn varieties, Ohio which had its best laid plans in 2006 changed from corn to beans in the Valley region because of persistent spring rains, and the west central Plains region of KS and NE which could see sorghum acres pushed to corn because of attractive prices. Trend yield for 2007 is estimated at 150 bu/acre, with harvest at 91% of plantings. Using Allendale's corn acreage est, production for 2007 is est at 11.903 bil bu. Using Informa's acreage estimate, 2007 corn production is est at 11.728 bil bu. Allendale estimate's carry in stocks of 942 mil bu which would bring total supply to 12.845 bil bu. Allendale's unofficial demand estimate based on trend yield of 150 bpa is 12.205 bil bu. Official complete breakdown of supply and demand will be released Jan 20th, 2007 at our 17th annual outlook conference.
Corn Fundamentals: Bullish to corn is good demand, investments funds attraction to bio fuels and weakening S. African corn crop. Bearish to corn is Argentina's corn crop, funds larger than usual combined futures and options position and slightly larger world end stocks projection than last month.
End Stocks: projected 2006-07 global end stocks of 93 MMT are the seconded tightest dating back to 1980. In 1983 end stocks were 89 MMT and corrected 32% to a level of 118 MMT by 1984. Most recently in 2003 end stocks were 103 MMT and corrected 27% to a level of 131 MMT in 2004. Domestic end stocks of 935 mil bu, similar to 2003's 958 mil bu. By 2004 domestic end stocks corrected by 120% to a level of 2.114 bil bu. Dating back to 1980, domestic stocks have been less than 1 billion bu only four times. From 1993 to 94, end stocks corrected 83%, from 1995 to 96 end stocks corrected by 107%, from 1996 to 97 end stocks corrected by 83% and 120% from 2003 to 2004.
Weekly Exports: corn sales f 55.1 mil bu were better than the 5 wk ave of 44.7 mil bu and 10 week ave of 46.4 million. Most impressive is the levels was more than strong enough to reduce the level needed on a per week basis to meet USDA target of 2.2 billion bushels.
Broiler Egg Set: this next section remains a problem for corn and soybean meal use. Broiler egg set was down 3% vs year ago levels for the same week of the year. Over the last seven weeks, egg set has been down 2%, down 3%, down 3%, down 3%, down 2%, down 3%, and down 3%. Why is that important? Because poultry is the largest consumer of soybean meal and 2nd largest user of corn when analyzing the feed use sector of the monthly WASDE reports. Eggs in incubators for broilers are now 207,710,000 vs 213,349,000 one year ago for this week of the calendar year. Broiler chicks placed are now 172,052,000 vs yr earlier levels of 173,392,000.