U.S. corn stockpiles before the 2013 harvest will be 45 percent bigger than forecast by the government as high prices lower use by cattle producers and ethanol makers, according to broker Allendale Inc.
Inventories on August 31 will total 873 million bushels, more than the 602 million bushels forecast by the U.S. Department of Agriculture on January 11. Feed use will drop to 4.3 billion bushels, less than the 4.45 billion bushels estimated by the USDA. Demand from ethanol plants, the biggest users of corn, will be 4.45 billion bushels, compared with the USDA forecast of 4.5 billion bushels, according to Allendale.
While corn futures on the Chicago Board of Trade are down since reaching an all-time high of $8.49 a bushel on August 10, closing January 25 at $7.2075, prices still are higher than 2012’s record average of $6.89 and more than twice the average of 2009. “How are you going to continue to feed $7 or $7.50 corn” to livestock, especially if meat prices aren’t rising as fast, said Allendale broker Steve Georgy. Beef, pork and poultry producers have no incentive to buy higher-cost animals if it means losing money on meat sales, “so the demand keeps getting less for corn,” said Georgy.
Production of corn will total 14.033 billion bushels in 2013, up 30 percent from 2012’s drought-reduced crop of 10.78 billion bushels, according to Allendale estimates. Farmers will seed 97.6 million acres of the grain in 2013, up from 97.2 million acres in 2012, and yields will total 157.1 bushels an acre, compared with 123.4 bushels an acre in 2012. Output will rise 30 percent from 2012 on increased yields and harvested acres, faster than the 21 percent increase in usage, boosting stockpiles on August 31, 2014, to 1.645 billion bushels, according to the Allendale report. Planted acres will rise 0.4 percent to 97.6 million while harvested area will increase 2.2 percent.