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Corn supply & price projections

03/04/2011 @ 1:39pm

The smaller than expected U.S. corn crop in 2010 and the rapid rate of increase in the use of corn for ethanol has resulted in prospects for very small domestic stocks at the end of the 2010-11 marketing year.

The USDA projects those stocks at 675 million bushels, representing only 5 percent of projected marketing year consumption. Corn prices doubled between late June 2010 and late February 2011 as domestic and world events pointed towards very tight supplies of corn and the need to expand domestic production in 2011.

Rising prices of corn and other commodities resulted in some escalation in the rate of increase in food prices and concerns that further troublesome increases would be forthcoming without some moderation in commodity prices.  Central to commodity and food prices in 2011 and beyond is the size of the 2011 U. S. corn crop.

Production Scenarios for 2011-12

For all of the 2011-12 scenarios, planted acreage of corn is projected at 92 million acres, 3.8 million more than planted in 2010.  That projection is based on the expected response of corn producers to the current high corn prices, but there is substantial uncertainty about the projection.  Prices of other crops competing for acreage in 2011 are also high.  It is not known how much total crop land acreage can be expanded in 2011 or how producers will respond to the array of high crop prices.

Based on the planted acreage forecast, we project harvested acreage of corn for grain at 84.9 million acres, reflecting typical acreage of corn harvested for silage and abandoned acreage. The USDA will report the results of its annual Prospective Plantings survey on March 31, 2011 and its annual Acreage survey on June 30, 2011.  These reports can be used to update the planted and harvested acreage projections used here.

Based on the acreage assumptions, a trend yield of 158 bushels in 2011 would result in a crop of 13.414 billion bushels and total marketing year supplies of 14.099 billion bushels. The supply of corn would be marginally smaller than the supply for the current year. Under the good weather scenario, the 2011 crop is projected at 14.348 billion bushels and total supplies are projected at 15.033 billion bushels, about 860 million larger than the supply for the current marketing year. Under the poor weather scenario, the 2011 crop is projected at 12.48 billion bushels, with a total marketing year supply of 13.175 billion bushels. That supply would be 1.0 billion bushels smaller than the supply for the current marketing year.

Consumption Projections for 2011-12

Making projections of marketing year corn consumption is complicated by the uncertainty about the strength of demand in each of the consumption categories.

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