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WASDE - Corn

Aug 10, 2012

COARSE GRAINS: U.S. feed grain supplies for 2012/13 are projected sharply lower again this

month with corn production forecast 2.2 billion bushels lower and sorghum production forecast 92

million bushels lower. The forecast U.S. corn yield is reduced 22.6 bushels per acre to 123.4

bushels as extreme heat and dryness continued, and in many areas worsened, during July across

the Plains and Corn Belt. As forecast, the 2012/13 corn yield would be the lowest since 1995/96.

WASDE-509-2

Corn area harvested for grain is also lowered, down 1.5 million acres from the last month’s forecast

that was based on the June Acreage report. The U.S. sorghum yield is forecast 16.3 bushels per

acre lower at 48.6 bushels as drought stressed sorghum from the Central Plains to the Corn Belt.

Sorghum harvested area is also lowered slightly.

U.S. corn production for 2012/13 is forecast at 10.8 billion bushels, the lowest since 2006/07.

Relatively small increases in carryin and imports only partly offset this month’s substantial reduction

in crop size. Ending stocks for 2011/12 are projected 118 million bushels higher with lower

expected exports, reduced corn use for ethanol, and a small increase in imports. Imports for

2012/13 are also raised, up 45 million bushels to 75 million, reflecting strong domestic corn prices

and competitively priced foreign supplies. Total U.S. corn supplies for 2012/13 are projected down

2.0 billion bushels and at a 9-year low.

This month’s large reduction in U.S. corn supplies and the sharply higher price outlook are

expected to further reduce 2012/13 corn usage. Total use is projected 1.5 billion bushels lower and

at 11.2 billion would be a 6-year low. The biggest reduction again this month is for feed and

residual disappearance, projected down 725 million bushels. Food, seed, and industrial (FSI) use

is also projected lower, down 470 million bushels, mostly reflecting a 400-million-bushel reduction

in corn used to produce ethanol. Reductions in other food and industrial uses account for the

remainder of the FSI decline. Ending stocks for 2012/13 are projected at 650 million bushels, 533

million lower and the smallest carryout since 1995/96. The 2012/13 season-average farm price for

corn is projected at a record $7.50 to $8.90 per bushel, up sharply from the $5.40 to $6.40 per

bushel projected in July. Projected farm prices for the other feed grains are also raised.

Global coarse grain supplies for 2012/13 are reduced 56.5 million tons mostly reflecting the

forecast 55.7-million-ton reduction in the U.S. corn crop. Larger 2012/13 corn beginning stocks in

the United States and Brazil partly offset lower U.S. and foreign coarse grain production. Brazil

corn beginning stocks are raised 2.8 million tons based on higher reported production for 2011/12.

Foreign corn production for 2012/13 is mostly unchanged with increases for China, Argentina,

Brazil, Mexico, and South Africa mostly offset by reductions for EU-27, Ukraine, India, Serbia,

Russia, Croatia, Moldova, and Canada. Foreign sorghum production is lowered 0.3 million tons

with a reduction for India. Reductions in barley production in FSU-12, EU-27, and Turkey lower

global barley production 1.1 million tons. A 2.5-million-ton reduction in India millet output also

lowers world coarse grain supplies.

Global 2012/13 corn trade is projected sharply lower this month in response to tighter U.S. supplies

and higher prices. Corn imports are lowered for China, EU-27, Indonesia, Japan, South Korea,

Mexico, Vietnam, Israel, Colombia, Peru, and Syria. In addition to the United States, corn exports

are reduced for Ukraine, EU-27, and Serbia. Partly offsetting are export increases for Argentina,

Brazil, South Africa, and Canada. Global corn consumption is projected 38.9 million tons lower with

the United States accounting for more than three-fourths of the reduction. Foreign corn feeding

drops 8.8 million tons with only part of the decline offset by higher wheat feeding. Corn feeding is

lowered for EU-27, India, Canada, Japan, South Korea, Russia, Ukraine, Vietnam, Israel, and

Indonesia. Global corn ending stocks are projected 10.8 million tons lower with increases for

China, Brazil, and Argentina only partly making up for the large reduction in the United States and

smaller reductions in a number of other countries.

DISCLAIMER: This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to the accuracy, and is not to be construed as representation by Commodity & Derivative Adv. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Read Entire Disclaimer.

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