March 2, 2005

 

World corn supplies to tighten in 2005-06

 

 

Global corn supplies were expected to tighten in 2005-06 from the level seen in 2004-05, in view of strong domestic usage and a small drop in production, according to projections made at the Canadian Wheat Board-sponsored Grain World conference being held in Winnipeg.

 

"There is certainly nothing wrong with the demand side of the equation," Daniel Basse, president of AgResource Company of Chicago, told delegates at the conference.

 

World corn ending stocks in 2005-06 were pegged by Basse to come in at 105.32 million metric tons, which would compare with his current 2004-05 forecast of 125.12 million tons and the US Department of Agriculture projection of 117.27 million tons for 2004-05.

 

Global corn production in 2005-06 was forecast at 672.20 million tons, compared with the 707.31 million tons he expects in 2004-05, Basse said. The USDA's world corn output estimate in 2004-05 was 701.82 million tons.

 

He said demand for corn on the world market will continue to grow, especially with demand for biofuels rising rapidly and as the livestock herds around the world also increase in size.

 

In terms of ethanol demand alone, he said there were 57 new plants being constructed in the U.S. at present, with another 30 in the planning stages.

 

Basse forecast US corn ethanol demand in 2005 at 1.4 billion bushels, compared with 1.1 billion bushels in 2004. By the year 2012, demand for corn in the U.S. for ethanol output will hit 2.4 billion bushels.

 

Increased global livestock production was also expected to result in higher world consumption of corn, Basse said.

 

World poultry production in 2005 was seen rising to around the 57 million to 58 million-ton level from the 2004 level of around 55 million to 56 million tons, Basse said.

 

"I'm not sure of the exact numbers, but that kind of tonnage translates into an awful lot of chickens that will need to be fed," he said.

 

The world hog herd will also bolster demand for corn as a feed, with Basse projecting world hog numbers in 2005 around 809 million to 810 million heads, compared with 805 million heads in 2004. The globe's cattle herd in 2005 was seen hitting 1.025 billion to 1.030 billion heads, which would be just fractionally above the 2004 level.

 

As a result of the ethanol needs for corn and the livestock sector's requirements, Basse said global corn demand alone in 2005-06 will hit 692 million tons, compared with roughly 687 million tons in 2004-05.

 

China was also seen by Basse as an importer of corn, possibly within the next 12 to 24 months.

 

Of the 692 million tons forecast for 2005-06, Basse said global corn exports would account for 78.0 million tons in 2005-06 compared with 75.16 million tons in 2004-05, while domestic usage in 2005-06 comes in at 614 million tons compared with 604.70 million tons.

 

Basse forecast US corn ending stocks in 2005-06 at 2.033 billion bushels, down from his forecast of 2.230 billion bushels in 2004- 05. U.S. corn ending stocks in 2004-05 was seen coming in at 2.010 billion bushels, according to USDA estimates.

 

US corn output in 2005-06 was seen falling to 10.978 billion bushels from his and the USDA's 2004-05 level of 11.807 billion bushels, Basse said.

 

US corn exports were seen coming in at 2.000 billion bushels in 2005- 06, up slightly from his 1.800 billion-bushel forecast in 2004-05 and the USDA projection of 1.900 billion bushels.

 

Food and industrial usage of corn in the US was seen rising to 3.150 billion bushels in 2005-06 from his 2.800 billion-bushel estimate for 2004- 05. The USDA, meanwhile, was working with a 2004-05 food and industrial usage figure of 2.795 billion bushels.

 

Feed and residual use of corn in the US was pegged at 6.050 billion bushels, compared with his 5.950 billion-bushel forecast in 2004-05 and the USDA forecast of 6.075 billion bushels.