The grain trade expects USDA to lower its estimates of 2011 U.S. corn production and 2011-2012 corn ending stocks on Thursday, while raising projected usage, when the agency releases a trio of reports that could have a significant market impact.
USDA’s annual Crop Production Summary will provide the corn market with a final estimate of 2011 output, while the quarterly Grain Stocks Report will give the market its first reading on 2011-2012 feed/residual demand. USDA’s monthly supply/demand update will provide revised usage and carryout projections.
Trade estimates of U.S. corn production average 12.271 billion bushels in a range from 12.165 billion to 12.375 billion bushels compared with USDA’s current estimate of 12.310 billion bushels, according to the combined results of surveys conducted by Dow Jones Newswires and Reuters News Service.
Yield estimates from 25 analysts surveyed by the two news agencies averaged 146.2 bu./acre in a range from 145.0 to 147.5 bu., compared with USDA’s current estimate of 146.7 bu.
Combined trade estimates of the 2011-2012 U.S. corn carryout average 750 million bushels in a range from 587 million to 1.020 billion bushels versus USDA’s December estimate of 848 million bushels.
With the trade on average looking for a 39-million-bushel cut in U.S. corn production and a 98-million-bushel drop, the pre-report estimates imply average expectations for projected corn usage to increase by 59 million bushels.
Some in the trade see strong December ethanol production as an indication that USDA is underestimating usage, but what impact of the demise of the 45¢ ethanol blenders tax credit will have on production the remainder of the marketing year is still unclear.
There may be some anticipation that crop losses in Argentina and Brazil will be a boost for U.S. corn exports, but there is no evidence of that yet at this point.
The big wild card will be feed/residual usage. USDA currently projects feed/residual use for 2011-2012 at 4.6 billion bushels, down 4.2% from last year despite larger U.S. livestock numbers.
However, trade estimates of Dec. 1 corn stocks, imply expectations for total first quarter corn disappearance to be down only moderately from the record level indicated last year.
Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.