March 6, 2012

A University of Missouri think tank projected on Monday (Mar 5) that came in 2.5% lower than the most recent US projection, that US farmers will harvest a record corn crop this year, which will rebuild stockpiles and bring down prices.

The Food and Agricultural Policy Research Center, or FAPRI, projected a corn crop of 13.916 billion bushels, 6% larger than the record set in 2009, based on the second-largest plantings since World War Two.

The USDA projected a crop of 14.27 billion bushels on February 24 at its annual outlook conference. Like USDA, FAPRI estimated a soy crop of 3.243 billion bushels. The think tank pegged US wheat at 2.239 billion bushels and upland cotton at 18.09 million bales.

"The rapid growth in corn ethanol production has slowed," said FAPRI in a briefing book. It estimated corn-for-ethanol would grow to 5.07 billion bushels in the marketing year that ends 2013, compared with 4.994 billion bushels this marketing year.

US corn yields were below normal in 2010 and 2011. With a return to trend-line yields, "the resulting large increase in production should allow some stock rebuilding that would moderate prices," said the briefing book.

Corn prices would average US$4.81 a bushel at the farm gate under FAPRI's projection, compared to US$5.96 a bushel for the 2011 crop.

FAPRI projected slightly smaller corn plantings and a smaller crop than USDA, which projected plantings at 94 million acres (38 million hectares), and a farm-gate price of US$5 a bushel. FAPRI projected 2012/13 end stocks of 1.346 billion bushels while USDA projects 1.616 billion bushels. USDA says 801 million bushels will be on hand when 2012/13 begins.

USDA and FAPRI have nearly the same figure for the soy crop -- USDA says 3.25 billion bushels compared with FAPRI's 3.243 billion bushels. But they differ on 2012/13 end stocks. USDA projected 205 million bushels and FAPRI 301 million bushels, due to smaller exports.

"Price volatility will continue," said FAPRI in discussing the outlook for US crops in coming years. It said corn prices could range from under US$3.50 a bushel to more than US$6 a bushel in any given year.

Like USDA, FAPRI expects plantings of the eight major crops to increase by about five million acres, or 2%, this year. It would be the largest total since 1998 according to USDA data.