December 11, 2010

US expects higher corn surplus

Compared to last month's forecast, US stockpiles of corn before next year's harvest will be 0.6% higher because of an increase in imports, according to the government.

The surplus on August 31, the end of the marketing year, will be 832 million bushels, up from 827 million forecast in November and less than 1.708 billion on hand a year earlier, the USDA said on December 10 in a report. A rise in imports to 15 million bushels from 10 million was the only change the department made from the previous forecast.

It will take near-perfect global weather next year to rebuild inventories to more comfortable levels, Jerrod Kitt, a market analyst for the Linn Group Inc. in Chicago, said before the report.

Corn futures for March delivery fell 0.25 cent to close at US$5.7425 a bushel Thursday (Dec 9) on the Chicago Board of Trade. Corn has surged 50% in the past year as adverse weather reduced global production.

The USDA's crop estimate of 12.54 billion bushels is 4.4% smaller than 2009's record output of 13.11 billion bushels. The government on January 12 will release its final estimate of this year's harvest and an estimate for consumption for the first three months of the marketing year that began September 1.

The USDA estimated world production in the 2010-2011 season, which began October 1, at 820.71 million tonnes, up from 818.52 million forecast in November, on increased production in the EU, Canada and Ukraine. That compares with a record 812.4 million tonnes harvested last season.

China, the second-largest producer, will harvest 168 million tonnes, unchanged from last month, the USDA said. Its estimate for China's imports and exports were also left unchanged, at 200,000 tonnes and one million tonnes, respectively.

Global consumption will reach 837.91 million tonnes, up from 837.31 million estimated last month and more than 812.5 million last year, the USDA said. It would be the second straight year world consumption exceeds output.

World inventories before next year's harvest will total 130 million tonnes, up from 129.16 million estimated in November and down from 147.19 million this year.