USDA projects increase in ending corn stocks

08 February 2013 22:47  [Source: ICIS news]

HOUSTON (ICIS)--The US Department of Agriculture (USDA) on Friday said that domestic corn ending stocks have increased since its January report.

In its February edition of the World Agricultural Supply and Demand Estimates (WASDE), the USDA estimated that corn stocks are now at 632m bushels, a 30m bushel increase. Corn exports are projected to be 50m bushels less in the period of 2012-2013, according to the WASDE.

The WASDE states that US feed grain ending stocks for 2012-2013 are projected higher this month, as lower expected exports outweigh an increase in projected domestic usage. The decreases in exports are based on the sluggish pace of sales and shipments to date, as well as the prospect of more competition from Brazil.

The report also forecast that the projected range for the season-average price for corn will be lowered by 20 cents at the midpoint and will fall in a range of $6.75-7.65/bushel (€5.06-5.74). This is a viewpoint that will likely viewed by commodity traders and outside investors as neutral to slightly bearish for the upcoming spring corn crop.

Overall corn prices have reacted favourably following the January WASDE report and reached as high as $7.40/bushel last week before several factors, including long-term weather forecasting, profit taking by non-commercial investors and uncertainty of the February report, caused futures pricing to slide over the last several days.

On Friday, corn fell by 1.6 cents to close at $7.09/bushel.

In the global perspective, the USDA has estimated that ending corn stocks have increased by 2.1m tonnes, with the rise coming from production in Brazil, Mexico, India and Ukraine. There was a reduction in the amounts from Argentina, with the agency forecasting 1m tonnes less due primarily to a lack of rainfall that has lowered potential yields, especially in terms of crops planted later in the South American country.

Looking to the other major US spring crop, the USDA said domestic soybean ending stocks are projected at 125m bushels, a decrease of 10m from last month. The report said that strong soybean meal exports during the first half of the marketing year are helping to offset declining shipments from Argentina. The season average soybean price range is projected at $13.55-15.05/bushel, up 5 cents on both ends of the range from the previous report.

The USDA has predicted that global soybean ending stocks are going to be at 269.5m tonnes, with Brazil expected to produce 83.5m tonnes, an increase of 1m from January’s report, and Argentina at 53m tonnes, reflecting a 1m decrease. Agricultural analysts have raised the possibility that traders will question the validity of the numbers, given the recent pace at which the market has been moving, which on face value would be viewed as being neutral to bearish

Besides traders and farmers keeping a watchful eye on the two crops, those within the fertilizer industry have been keeping tabs on the market as the spring refilling season for the major nutrients has commenced. 

Following the traditional seasonal slowdown and a strong fall application period, market sentiment and pricing for urea and ammonia are beginning to climb higher, as distributors have begun to restock inventories in advance of potentially the largest corn crop to be planted in US history.

($1 = €0.75)

By: Mark Milam
+1 713 525 2653

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