Corn production is forecast at a record 14.8 billion bu., according to this month’s World Agriculture Supply and Demand Estimates (WASDE). That would be a staggering 2.4 billion bu. more than last year. The season-average farm price for the new crop is projected at $4.20-$5/bu., down sharply from the 2011-12 record projected at $5.95-$6.25/bu.
“While old crop contracts remain well supported by tight current stocks and recent better-than-expected exports, expectations of a large 2012 crop have put pressure on new crop futures,” said John D. Anderson, American Farm Bureau Federation senior economist.
In an early May edition of In the Cattle Markets, Anderson explained, “Last Friday (May 4), the spread between May and December corn contracts was $1.38. This is the largest May/December inversion since 1996, when a similar fundamental situation (short old crop, expectations of large new crop) was developing.”
Darrel Good, University of Illinois ag economist, says new-crop demand concerns revolve around ethanol demand and EU economic worries.
“First, the delayed, and likely slow, implementation of 15% ethanol blends in the U.S. fuel supply point to stagnating corn consumption in that category next year as the E10 blend wall rapidly approaches,” Good says. “Second, the European debt crisis, a slower pace of economic growth in China, and the slow pace of job creation in the U.S. dampen commodity demand expectations for the year ahead.
“…Conditions currently point to a substantial buildup of U.S. corn inventories next year and increasing expectations that prices will return to the lower averages experienced in the 2007-08 through 2009-10 marketing years,” Good says. “Average prices received by farmers in that three-year period averaged just under $4.”
In other crop news, according to the Livestock Marketing Information Center, “U.S. May 1 hay stocks were over 6,000 tons more than expected, coming in only 3.8% below a year ago. Nationwide, hay use this past winter was reduced compared to last year’s by both weather conditions (mild in much of the northern U.S. and improved grazing in the Southern Plains) and record high prices. Many producers chose lower cost options like feeding baled corn stalks. U.S. hay disappearance between the Dec. 1 and May 1 USDA-NASS stocks reports was the lowest since 1980.”
Speaking of weather patterns, the La Niña that wrought the historic drought which still lingers in some parts of the Southern Plains is officially dead. According to the National Weather Service, La Niña dissipated in April and reached neutral conditions by the start of May.
For the week ending May 14 according to the National Agricultural Statistics Service:
Corn – 87% is in the ground, 31% more than last year and 21% more than the five-year average. 56% has emerged, 40% more than last year and 28% more than the five-year average.
Soybeans – 46% is planted, which is 29% ahead of last year and 22% more than the five-year average. 16% has emerged, 13% more than last year and 11% ahead of the average.
Sorghum – 38% is planted, 8% more than last year and 9% ahead of average.
Winter wheat – 72% was at or beyond the heading stage, 22% more than last year and 26% more than the average. 60% is in Good to Excellent condition, compared to 32% last year.
Spring wheat – 94% is planted, which is 61% ahead of last year and 30% more than the five-year average. 68% has emerged, 58% more than last year and 36% more than the average.
Oats – 97% of seeding is complete, which is 27% ahead of last year and 11% ahead of the average pace. 88% of the crop has emerged, 35% ahead of last year and 20% ahead of the average. 36% of the crop has headed, 3% ahead of last year and the average. 75% is in good or excellent condition, compared to 52% last year.
Barley – 93% is planted, which is 47% more than last year and 25% ahead of normal. 56% has emerged, which is 36% more than last year and 21% ahead of the five-year average.
Pasture – 54% of the nation’s pasture and range is rated as Good or Excellent, 2% more than at the same time last year. 17% is rated Poor or Very Poor, 5% less than a year ago. States reporting more than 35% of pasture as Poor or Very Poor were: Arizona (66%); Florida (44%); Nevada (54%); New Mexico (76%); and Texas (35%).