USDA projects $5 new crop corn
USDA’s first look at prices for 2012 crops, a projection of current economic conditions and normal weather, not a forecast, has U.S. corn prices at the farm level averaging $5 a bushel for the 2012-13 marketing year, down from $6.70 for the current marketing year. The projection sees corn prices bottoming out at $4.30 a bushel in 2013-14 before beginning to rise again.
“Prices for major crops are projected to decline in the near term as global production responds to recent high prices,” the report released Monday says. “Nonetheless, after near-term price declines, long-term growth in global demand for agricultural products, in combination with the continued presence of U.S. ethanol demand for corn and EU biodiesel demand for vegetable oils, holds prices for corn, oilseeds, and many other crops at historically high levels.”
USDA Agricultural Projections to 2021 cites a slowing of growth in corn used for ethanol in the United States and growth in U.S. corn exports, even as the U.S. share of world corn export trade declines by 2021.
“U.S. corn exports are projected to grow over the next decade and approach record levels by 2021. However, large world supplies of feed-quality wheat compete with U.S. corn exports at the beginning of the projection period. The U.S. share of world corn trade declines slowly from an average of about 55 percent during the last half decade to less than 47 percent by 2021 as exports rise more rapidly from the countries of the former Soviet Union (FSU), Brazil, the EU, and other European countries.”
Corn exports from the FSU [Former Soviet Union], mostly Ukraine, rise nearly 60 percent to more than 17 million tons by 2021. Favorable resource endowments, increasing economic openness, wider use of hybrid seed, and greater investment in agriculture all stimulate corn production in this region.
Brazilian production and exports of corn are projected to increase in response to high world prices, especially during the latter part of the projection period. Brazil’s corn exports have been large during the last few years as Brazil has targeted the EU’s demand for grain that is not genetically modified (GM). This marketing opportunity has diminished as Brazil has expanded its own production of GM corn varieties.
Argentina’s corn area and exports are projected to stagnate in the early years of the projections due to the continuation of quantitative controls on exports. Then, exports grow slowly toward the end of the period. Still, with a small domestic market for corn, Argentina remains the world’s second-largest corn exporter.