Author: Michael Ferrari, PhD
VP, Applied Technology & Research
In the USDA Foreign Agriculture Service May 2011 World Agricultural Production Report, it was noted that projected corn production in the US for the 2011/12 season is currently at 343.04 mmt, which would be an 8.5% increase over last year. The increase in planting acres (roughly +1.4 mm ha) is largely responsible for the favorable supply outlook as yields are anticipated to increase only slightly. Globally, the production balance is estimated by USDA to come in +6.42% higher than last year. Our summer outlook is hinting at some y/y dryness in the western corn belt in July (see map below), while in the east, we are expecting a favorable pattern. We have noted in previous columns that numerous analysts are stressing the need for ‘perfect weather’ in order to generate the supply needed to keep pace with corn demand, coming from both the food and fuel sectors. The current flooding along the southern belt has already delayed crop plantings, and looking at anticipated dryness creeping in during August, we are betting against a perfect summer.
The NASS Crop Production Report from May 11th highlighted the April flooding up an down the Mississippi River. In addition, the wet (and cool) weather delayed planting of the corn crop which was reflected again by the planted acres status as of May 8th, highlighted in the following table. The first map below shows the late April y/y precip, and the second underscores the %soil moisture for the same period. For the top corn growing states, planting progress was 40% complete, vs. 80% this time last year. It follows that only 7% of corn had emerged by that date, compared to 36% in 2010 and a five year average of 21%
With the longer maturity cycle required for corn, as the planting window begins to narrow, growers may start to be faced with the decision to switch acres to another crop with a shorter growing cycle such as soybeans, but some may also opt for planting cotton and groundnuts, particularly in the southeastern states. Despite macroeconomic uncertainty, the general outlook is for sustained demand, so after corn futures have been pulled back along with the broader ags/softs commodity complex, the outlook may start to turn constructive in the coming weeks. In addition, the recent surge in beef and dairy demand will strengthen the feed market in the US.