U.S. Corn Output May Rise to Record, USDA Says; Soybean, Wheat Crops Gain
Saturday, 25 February 2012 | 00:00
U.S. corn production may jump 15 percent to a record 14.27 billion bushels as surging profits spur farmers to plant the most acres since World War II, the government said. Soybean and wheat output also may climb.
Domestic corn inventories before this year’s harvest may rise to 1.616 billion bushels, rebounding from a 16-year low in the previous year, the U.S. Department of Agriculture said today in a report. Yields may average 164 bushels an acre from 94 million acres planted, the most since 1944. About 4.95 billion bushels will be used to make ethanol, the fewest in three years, the USDA said.
“It appears more profitable to produce corn,” Ed Allen, a USDA field-crops analyst, said in a presentation at the department’s annual outlook forum, where the data was released. “With normal weather, we expect a yield rebound. Since we have a higher area, the supply response is rather dramatic.”
A bigger corn crop and slowing demand for the grain’s use in ethanol may lower prices and boost U.S. inventories that shrank to a 16-year low in the past year. Farmers in 2012 will receive $5 a bushel, down 19 percent from last year, while wheat prices will slide 14 percent and soybeans may drop 1.7 percent, the USDA said yesterday. The decline will push farm profits down 6.5 percent to $91.7 billion, second only to last year’s record.
Rising U.S. yields may boost soybean production to 3.25 billion bushels, up 6.3 percent from last year’s crop of 3.056 billion, the USDA said. Inventories before the 2013 harvest may still tumble 25 percent to 205 million bushels, in part as exports climb.
Exports to China, which last year bought 29 percent of the value of the U.S. soybean crop, “are a supportive factor on supply and demand,” while the size of this year’s crops in Brazil and Argentina will be key to determining prices, Allen said. Brazil this year will surpass the U.S. as the top soybean shipper for the first time, according to USDA projections.
“We have not reached our potential” in South America, Pablo Adreani, the director of AgriPAC Consultants, a Buenos Aires-based agricultural consultancy, said at the USDA forum. He predicted the region will continue to boost its global market share.
Bigger Wheat Crop
U.S. wheat output may rise to 2.165 billion bushels, up 8.3 percent from the 1.999 billion a year earlier, according to the USDA. Exports may be unchanged at 975 million bushels, while feed use jumps 24 percent to 180 million bushels. Stockpiles may total 957 million bushels before the 2013 harvest, up 13 percent from a year earlier.
“The wheat price is supported by the corn price, and it’s profitable to sell wheat,” Allen, the USDA analyst, said. Increased competition from nations of the former Soviet Union, where annual variations in yields are twice those in the U.S., will contribute to price volatility, he said. Still, higher inventories should mute sharp price moves, he said.
The U.S. is the world’s largest grower of corn and soybeans, and the biggest exporter of corn and wheat.