Food Business News - May 21, 2013 - 26

Market Insight

Outlook positive
for most crops
he U.S. Department of
Agriculture, in its initial
forecasts for the 2013-14
marketing year issued in the
May 10 World Agricultural Supply and Demand Estimates and
subsequent commodity outlook
reports, projected record large
2013 U.S. corn and soybean
crops and a record large world
wheat crop even if 2013 U.S.
wheat production is seen below the 2012 level. At the same
time, U.S.D.A. 2014 carryover
projections for wheat, corn and
soybeans were up sharply from
2013 and were above average
trade estimates.
As a result of large domestic
and/or world crops, projected
2013-14 average prices for most
crops in the United States are
down sharply from the current
year. While the lower prices may
renew foreign buying interest,
stiff competition from large global grain and oilseed supplies also
may limit gains in U.S. exports.
The biggest turnaround is
expected to be in U.S. corn production, projected at a record
14,140 million bus in 2013, up
31% from a drought-reduced
10,780 million bus in 2012. The
May 2012 U.S.D.A. projection
for last year’s crop was 14,790
million bus. While planted area
was seen up only 100,000 acres
at 97.3 million acres in 2013,
harvested area was projected at
89.5 million acres, up 2.1 million
acres from last year, as fewer
acres are expected to be aban-

RON STERK

rsterk@sosland.com

FOODBUSINESS NEWS

doned under more favorable
weather conditions. Average
yields are seen rebounding from
a 17-year low (113.5 bus an acre
in 1995) of 123.4 bus an acre in
2012 to 158 bus an acre in 2013.
The projected average yield is
5.6 bus below the “trend” yield
as late plantings have trimmed
potential, the U.S.D.A. said.
A University of Illinois study
indicated average yields in that
state tend to decline by 8% for
corn planted after May 10, by
15% after May 20, and by 25%

The U.S.D.A. projected the
price of corn paid to farmers
in 2013-14 to average between
$4.30@5.10 a bu, down from
$6.70@7.10 expected in 2012-13
and $6.22 in 2011-12. New crop
corn futures were trading around
$5.50 a bu last week, about $1 a
bu below old crop contracts.
But the United States isn’t
alone in boosting 2013-14 corn
production, with record global
coarse grain production, mostly
corn, also projected. A record
large corn crop is expected in

U.S.D.A. projects large
domestic, global crops in 2013-14
after June 1. Corn planting
in Illinois by May 12 was 17%
completed, compared with 94%
planted by the same date in 2012
and 64% as the 2008-12 average
for the date. Illinois is the second largest corn growing state
after Iowa, where planting on
May 12 was only 15% completed compared with 86% a year
earlier and 79% as the five-year
average. Corn planting in the 18
largest growing states as an aggregate was 28% completed by
May 12, compared with 85% a
year ago and 65% as the average.
Should the record large 2013
corn production occur, the
U.S.D.A. foresees stocks growing
and prices tumbling. In its May 10
WASDE, the U.S.D.A. projected
the 2014 corn carryover at 2,004
million bus, up 164% from 759
million bus forecast for Sept. 1,
2013. The 2014 carryover would
be the largest since 2,114 million
bus in 2004, while the 2013 carryover would be the smallest since
426 million bus in 1995.

China, with strong production
also seen in South America,
E.U.-27 and the former Soviet
Union countries.
The U.S.D.A. also projected a
record large U.S. soybean crop
of 3,390 million bus in 2013, although the contrast was less dramatic than that of corn, up 12%
from 3,015 million bus in 2012.
The projection was based on a
100,000-acre increase from 2012
in harvested area and a return
to trend yields, expected to average 44.5 bus an acre, up from
the drought-reduced yield of 39.6
bus an acre in 2012. As with corn,
projected carryover on Sept. 1,
2014, of 265 million bus soared,
up 140% from 125 million bus in
2013. Prices paid to farmers for
soybeans in 2013-14 were projected to average $9.50@11.50
a bu, down from $14.30 a bu in
2012-13 and $12.50 in 2011-12.
U.S. soybeans may face stiffer export competition in 201314 as production gains “far outstrip its consumption growth,”

the U.S.D.A. said. Back-to-back
expected record soybean crops
in Brazil, which topped the
United States as the world’s
largest soybean producer in
2012-13, and delays in marketing and shipping have resulted
in large carryover stocks there.
Last week’s favorable weather also allowed significant planting progress for U.S. spring
wheat and other crops. But it
may deter ideas of increased
soybean plantings as farmers
will be less likely to switch from
corn to soybeans if they can get
their corn in the ground before
the end of May.
U.S. wheat producers face
the grim prospect of lower
production levels (except for
soft red winter wheat) in 2013
and lower prices amid limited
export potential due to record
global production.
It should be noted that with
the exception of survey-based
winter wheat estimates, all
other U.S.D.A. domestic projections were based on trend
yields and prospective planting numbers, with the latter
especially susceptible to wide
changes before actual plantings
occur. Survey-based planted
area won’t be known until the
June 28 Acreage report.
Now it’s up to the weather,
which let most U.S. producers down a year ago, to deliver
favorable growing conditions.
Although the cool and wet
2013 planting season so far
has been drastically different
from last year’s warm and dry
weather, most meteorologists
have forecast significantly improved growing conditions
from last year, which bodes
well for reaching the U.S.D.A.
numbers. FBN

May 21, 2013

Food Business News - May 21, 2013

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