What is in this article?:
- Farm household debt levels appear to have stabilized despite increasing land values.
- While prospects generally look bright, recent sharp increases in prices for major crops are generating a range of concerns.
Total corn use
Total corn use is projected at 13.56 billion bushels. Higher exports and higher corn use for ethanol will more than offset an anticipated reduction in feed use. Feed and residual use is anticipated to fall slightly in 2011/12 as high feed costs limit expansion in the pork and poultry sectors and beef feeding declines with tighter feeder cattle supplies. Exports, however, are anticipated to increase to 2 billion bushels as reduced global use of feed quality wheat boosts world corn trade and consumption.
Corn use for ethanol continues to grow. Weekly ethanol production numbers suggest that ethanol production is currently running over 13.5 billion gallons on an annualized basis. This far exceeds levels implied by the mandated levels under the Renewable Fuel Standard (12.6 billion gallons in 2011). On average, production margins for ethanol producers remain positive as many plants appear to have forward-priced their corn requirements below the recent market highs.
Incentives for ethanol blending remains strong with the Volumetric Ethanol Excise Tax Credit in place through 2011 and ethanol expected to remain attractively priced relative to gasoline. As a result, corn use for ethanol is expected to grow further in 2011/12 to a record 5.0 billion bushels.
At this level, corn use for ethanol would account for 37 percent of total use and 36 percent of corn production.
With total supply at 14.425 billion bushels and total use at 13.56 billion bushels, ending stocks are projected at 865 million bushels in 2011/12, a modest 190-million bushel increase over the level projected for 2010/11 levels. Stocks-to-use levels will remain tight at 6.4 percent.
Corn prices are forecast at a record $5.60 per bushel, $0.20 higher than the mid-point of the range forecast for 2010/11.
Higher than trend yields or larger planted area could help rebuild corn stocks, but stock levels are not likely to return to recent levels over the course of one or even two seasons. For example, if 2011/12 yields were to equal the record level of 164.7 bushels per acre achieved in 2009/10, ending stocks would exceed 1.1 billion bushels. And this assumes no increase in use for feeding, ethanol, or exports, an unlikely scenario.
Further, assuming this yield and no increase in usage, 2011 planted area would have to increase 8 million acres to return stocks to the 2010/11 level of 1.7 billion bushels.
Soybeans to remain tight as well.
Soybean planted acreage is forecast at 78 million acres due to strong prices and increased double-cropping opportunities compared to last year.
Assuming trend yields and harvested acreage of 77.1 million acres, production is estimated at 3.345 billion bushels. With a carry-in of 140 million bushels and imports forecast at 15 million bushels, total supplies for 2011/12 are forecast at 3.5 billion bushels, about 5 million bushels more than total supplies for 2010/11.
Domestic use is estimated to be 1.765 billion bushels, unchanged from 2010/11.
Exports, are forecast at 1.575 billion bushels, and, while down from this year’s record 1.59 billion bushels, would be the second largest on record. One out of every four soybean rows planted in the United States is currently exported to China and that is expected to continue in 2011/12 though U.S. exports will face renewed competition from South American exports from Brazil and Argentina.
Total use for 2011/12 is estimated to be 3.34 billion bushels, down 15 million bushels from the current year. Ending stocks are estimated to increase by 20 million bushels to 160 million bushels, the highest level of carryout since the 2007/08 marketing year.