March 13, 2012

Corn, soy prices likely to drop 25% by end 2012

Global soy and corn prices are expected to fall by 15-25% by the end of this year, as supported by the latest supply and demand report from USDA, according to the forecast by Capital Economics.

According to the monthly "World Agriculture Supply and Demand" published by the USDA, the March estimates of the global corn balance show only a marginal decline of approximately 0.8 million tonnes.

More importantly, corn production estimates for Argentina were unchanged while estimates for Brazil actually increased by one million tonnes. Capital Economics points out that the improvement in Brazilian production together with higher production in India has largely offset the impact of higher global consumption.

As a result, global stock-to-use ratio remained at the same level as last month, at 13%. So according to Capital Economics, based in part on recent USDA estimates, it is expected that the price of corn will fall to around US$5.50 per bushel by the end of 2012.