October 25, 2011

US ending corn stocks expected to be lower than official estimates 

The forecast made by Informa Economics indicate that US corn inventories for 2012-2013 will end the season at 746 million bushels, 120 million bushels below USDA estimates.

The influential analysis group, expanding on forecasts made, said that Chicago corn futures would average about US$6.45 a bushel this year, and Chicago wheat about US$6.40 a bushel, on a near-lot basis, not far off current values.

Soy will average US$12.90 a bushel, well above current levels, thanks to stocks which will, at 150 million bushels, end 2011-12 some 10 million bushels thinner than the USDA predicts.

However, prices next year will fall back dramatically with the fading in the spring than the renascent La Nina, seen as a less severe version of the weather event than that last season.

With higher sowings and a yield rebounding to a record 44.6 bushels per acre, from 41.5 bushels per acre this year, US soy output will hit an all time high of 3.4 billion bushels.

That will depress futures prices to US$11.75 a bushel, a level rarely seen in the last year, Informa analysts told.

Corn futures will average US$5.20 a bushel, a level not seen since November last year, thanks to output boosted to 14 billion bushels by a rise in sowings and a rise in yield, offset somewhat by a rise in exports of the grain and higher use by livestock farmers and ethanol plants taking advantage of lower prices.

Wheat futures will fall back to US$6.05 a bushel, depressed by a 100 million bushel rise to 922 million bushels in US inventories over 2012-13, thanks to a rise of 1.5 to 45.4 bushels per acre, in yields.

This season, Informa believes that the balance table will remain tight and support the market on breaks. Next year, the forecast is for "yields to bounce back and press the market lower".