Aug. 13, 2013
The 2012-13 coarse grain marketing year is ending with tight supplies and rising prices, but a big crop is coming for 2013-14. Trading in the new crop is affected by weather reports.
“Global coarse grain supplies for 2013-14 are projected 3.6 million tonnes lower, with 2.9 million tonnes of the decline resulting from the tighter supply situation for corn and sorghum in the United States,” the U.S. Department of Agriculture (USDA) said in its World Agricultural Supply and Demand Estimates report. “Foreign coarse grain supply and use changes this month are relatively small in the aggregate.”
The report puts U.S. corn production at 354.35 million tonnes in 2013-14. A month earlier the prediction was 355.74 million tonnes. The USDA puts 2012-13 U.S. corn production at 273.83 million tonnes.
In its quarterly Crop Prospects and Food Situation report, the United Nations Food and Agriculture Organization (FAO) forecast world production of coarse grains in 2013 at about 1.275 billion tonnes, up sharply (9.7%) from 2012.
“Latest estimates confirm increased harvests in Argentina and Brazil, the two major producing countries in the Southern Hemisphere, while a smaller crop has been harvested in South Africa,” it said. “Elsewhere, increased outputs are forecast among the major Northern Hemisphere producing countries.
“In the United States, where corn plantings increased and yields are expected to return to normal after last year’s drought-reduced levels, production is expected to recover markedly. Corn output is also set to increase in China, which accounts for the bulk of the production in Asia, and in the E.U., where prospects are particularly favorable in the large corn-producing areas of Romania and Hungary.”
FAO expected greater production to support an increase in feed use of coarse grains, “while its industrial applications, especially for production of corn-based ethanol, are also forecast to rebound after a decline in 2012-13.”
In a report issued on July 1, the International Grains Council (IGC) reported a 3% rise month-on-month (m/m) in its IGC GOI corn price index, but noted that “new crop futures were pressured lower by the prospect of a sharp increase in supplies.”
It forecast an 11% rise in production to 946 million tonnes in 2013-14.
“Larger harvests in some countries will restrict gains in 2013-14 trade, but China is expected to be a much larger buyer,” it said.
“Export prices in the U.S., Argentina, Brazil and the Black Sea were higher compared to a month ago,” it said. “Old crop U.S. maize futures were underpinned by very firm cash markets and slow country movement. A bearish quarterly stocks report, issued June 28, which showed tighter than expected old crop supplies, provided a further boost, with July futures posting 2% m/m gains.”
Trade in new crop futures was sometimes choppy, with activity heavily influenced by weather, the IGC said.
“Prospects for a sharp increase in 2013-14 supplies were reinforced by a surprisingly large official plantings forecast and, with the weather outlook mostly favorable, new crop (December) futures fell by 7% m/m,” IGC said. “Gulf premiums were lifted by tight pipeline supplies and, with some exporters reporting difficulties sourcing sufficient amounts to fill existing orders, nearby prices were quoted up 3% m/m, at $311 fob.”
The FAO also noted higher prices.
“International corn prices increased somewhat for the second consecutive month in June,” it said. “The benchmark U.S. corn value (US No. 2, Yellow) averaged $300 per tonne, 2% up on its May level and 12% higher than a year earlier. The increase reflects a continued tight supply situation, which may persist until the arrival of new corn crops in October. However, a stronger U.S. dollar and the forecast for a sharp rebound in corn production limited the increase in prices.”
In the U.S., the National Corn Growers Association (NCGA) welcomed a USDA report in July showing the crop in good condition and making rapid progress toward maturity.
“Early in the season, farmers pushed ahead to plant a record number of acres despite cool, wet conditions across much of the Corn Belt,” NCGA President Pam Johnson said. “Week after week, we are encouraged by reports that the crop condition remains solid throughout the country and that corn maturity is moving along at a reasonable pace given average planting dates this year. Should favorable weather continue to fuel growth, U.S. corn farmers could produce a record crop in 2013.
“Currently, 89% of all corn acres are forecast to be in fair–to-excellent condition, with only 11% rated in poor or very poor condition, While the percentage of corn in good condition dropped by three points (during a week in mid-July), the forecast for corn in excellent condition held firm at 17%. Last year, only 3% of the crop was estimated to be in excellent condition at this point.”
Chris Lyddon is World Grain’s European editor. He may be contacted at: firstname.lastname@example.org.