August 15, 2006

 

Demand for US corn to exceed supply by 7 percent next year

 

 

Corn consumption is increasing at such a breakneck pace stockpiles may be depleted by 2008 unless plantings expand rapidly, analysts said on Friday (Aug 11).

 

Even as the USDA announced last week the third-largest corn crop ever, at nearly 11 billion bushels (278.8 million tonnes), its usage is now surpassing production, albeit by a small margin.

 

In the new 2006/07 marketing year, foreign and domestic demand is expected to reach 839 million bushels or 7 percent more corn than is being grown, according to USDA.

 

If USDA's crop forecast is right, it would mean more time to forestall the corn supply crisis to next year (2007/08), said private consultant John Schnittker. He said an additional 800 million-900 million bushels (21.6 million tonnes) of corn are needed in 2007 to prevent shortages.

 

Growers need to plant around 85 million acres (34.4 million hectares) of corn next year to assure an adequate supply, analysts said.

 

As a result of soaring demand, stockpiles are expected to drop 40 percent, to 1.2 billion bushels (31.3 million tonnes) by next fall.

 

USDA estimates corn uses for livestock, food ingredients and ethanol would reach 11.8 billion bushels (245.5 million tonnes). The burgeoning ethanol industry is expected to account for 2.15 billion bushels, or 18 percent, of the corn crop.

 

Schnittker said an additional 6 million or 7 million acres (2.6 million hectares) of corn were needed on top of the 79.4 million acres (30.3 million hectares) planted this year. He expects next spring's corn acreage to be up 5 percent.

 

However, Paul Bertels, director of biotechnology at the National Corn Growers Association is not worried about a possible corn shortage. He said attractive market prices for corn would result in at least 81.5 million acres (33 million hectares) of corn being planted next year.

 

Prices would skyrocket if corn crops were to fall short in the next few years, said agricultural economist Daryll Ray of the University of Tennessee, adding that plans for a buffer stock programme are already under consideration in Congress.

 

Along with its corn forecast, USDA forecasted the soybean crop at 2.928 billion bushels (79.7 million tonnes) the third largest on record.

 

Meanwhile, the wheat crop is estimated at 1.8 billion bushels (49 million tonnes). Wheat is now selling for an average US$4.20 a bushel, the highest farm-gate price since 1996/97.