February 23, 2005

 

 

Abundant corn supply in the United States

 

The United States continues to keep more than adequate supplies of No. 2 yellow corn while demand for inexpensive grains persists.

 

According to Randy Martinson, Progressive Ag, of West Fargo, N.D., corn continues to compete with large quantities of coarse grains held globally.

 

Of the 39.2 billion bushels of global supply of coarse grains projected for February 2005, approximately 12.576 billion bushels were located in the United States.

 

The US-produced 11.8 billion bushels of corn in 2004, and corn stocks on Dec. 1, 2004 totaled 9.45 billion bushels, up 19 percent from Dec. 1, 2003.

 

February estimates for US corn ending stocks for the 2005 fiscal year were 1.985 billion bushels - up from an estimate of 1.96 billion bushels in January. The 2004 fiscal year estimate for corn ending stocks last January was 958 million bushels.

 

In its Feb. 9 reports, USDA decreased US corn exports from 1.95 to 1.925 billion bushels. However USDA still forecasts 2005-06 US exports at 2.3 billion bushels, and an average US yield of 146 bushels/acre for 2005 vs. the 2004 average yield of 160.4 bushels.

 

USDA announced US export sales for the week ending Feb. 3 at 39.2 million bushels vs. trade expectations of 400,000-600,000 tons.

 

Cumulative sales reached 56.1 percent of USDA's forecast for the marketing year, as opposed to 56.6 percent on average for this time of year. The US needs to export an average of 710,400 metric tons of corn weekly to meet USDA's 2005 corn export estimate.

 

Domestically, USDA forecast total feed and residual use of corn at 6.075 billion bushels and food and seed at 1.37 billion bushels for the current marketing year.

 

Ethanol use is forecast at 1.425 billion bushels during the current marketing year - up from 1.168 billion bushels a year ago. Ethanol demand for next year is forecast at 1.65 billion bushels.

 

USDA traditionally waits until the March stocks report to make adjustments to domestic demand. Martinson says that traders will be trying to assess the size and scope of upcoming domestic feed use.

 

"Opening the Canadian border is going slower than many expected, so those cattle have not entered feedlots here," said Martinson. "In the US, we haven't seen the expansion in hog inventories to use up a lot of this corn, and US cows are being held for the breeding herd, so those animals are going on pasture rather than to the feedlot. So there's less corn demand."

 

Martinson said traders would be watching closely to see what percentage of acres would be switched from soybeans to corn or other commodities for the 2005 growing season.

 

While some areas of the nation may see a reduction in soybean acres, the Northern US is expected to keep their corn/soybean rotation for the most part because of less potential harm from soybean rust, Martinson concluded.