Increased efficiency and careful risk management will be vital in the coming year.
Globally, all corn users will face the challenge of higher prices and the need for increased efficiency, careful risk management and creative marketing strategies during the coming year, said the U.S. Grains Council after the U.S. Department of Agriculture released its latest agricultural supply/demand update on Aug. 10. The report again lowered the outlook for U.S. corn production, reflecting the continued deterioration of the 2012 crop due to the ongoing drought that affects most of the U.S. corn belt.
Watch the on-demand webinar, “USDA August crop report: Analysis and implications,” which offers forecasts of feed grain costs and availability, insight into challenges the protein market will face in 2012 and observations about the global impact of the 2012 U.S. crop. Speakers include Tim Brusnahan of Richard A. Brock & Associates Inc., and Dr. Chris Hurt, professor, agricultural economics, Purdue University.
“As the projections for U.S. corn use demonstrate, the high prices will ration demand in all markets and in all sectors (feed, food and fuel),” said the U.S. Grains Council. “Also, the relatively smaller decline in U.S. exports compared to domestic use reflects the resilience of global feed demand.” The latest USDA projection lowers U.S. corn production to 274 million metric tons (10.8 billion bushels), down almost 40 million tons (1.6 billion bushels) from 2011 numbers and the lowest since 2006. World corn production is estimated at 849 million tons (33.4 billion bushels), down 27 million tons (1.1 billion bushels) from 2011.
With this large reduction in U.S. corn supplies, higher prices are expected to ration demand during the coming year. The USDA projects that total world corn use will decline about 7 million tons (275.6 million bushels) from 2011, while U.S. total use will drop 25 million tons (984.2 million bushels) — feed use down 12 million tons (472.4 million bushels), corn use for ethanol down 12.7 million tons (500 million bushels) and exports down 6.3 million tons (248 million bushels). The USDA also expects world corn imports to decline by almost 7 million tons (275.6 million bushels), while non-U.S. feed use will continue to grow, up 13 million tons (511.8 million bushels) from 2011 numbers to 405 million tons (15.9 billion bushels).
“Despite the decreases projected for U.S. corn production, the United States remains open to trade,” said the U.S. Grains Council. “In the coming year it will be vital that all exporting countries follow the U.S. example: Open markets, transparent market information and careful planning can help us all work through the coming year.”