(Posted Tue. Aug 14th, 2012)
Aug. 14: This week, the U.S. Grains Council, of which the National Corn Growers Association is a founding member, released an in-depth analysis of recent U.S. Department of Agriculture reports which revised corn production and market forecasts. Looking closely at the broader, international implications, the Council examines how natural market forces will stabilize corn markets and push corn users to find innovative ways to maximize efficiency and improve marketing and risk management strategies.
The Council report begins acknowledging that in its monthly agricultural supply/demand update the U.S. Department of Agriculture on August 10 again lowered the outlook for U.S. corn production, reflecting the continued deterioration of this year's crop due to the once-in-a-lifetime drought that affects most of the U.S. Corn Belt.
The latest USDA projection lowers both world and U.S. corn production forecasts to levels below those achieved in 2011/2012, but notes world production estimates remain higher than 2010/2011 due to higher production from China, Brazil and Argentina.
With this large reduction in U.S. corn supplies, higher prices are expected to ration demand during the coming year according to the Council analysis. USDA projects that total world corn use will decline about 275.6 million bushels from last year, but U.S. total use will drop also. The largest declines, according to the report and analysis, will be seen in feed use, corn use for ethanol and in U.S. corn.
The Council analysis states that countries will respond to the tight corn supplies and higher prices in the coming year in different ways. For example, Japan and South Korea imports are projected be unchanged from 2011 to 2012. China's corn imports likely will decrease due partly to a record domestic corn harvest.
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 according to the Council. As the projections for U.S. corn use demonstrate, the high prices will ration demand in all markets and in all sectors. Also, the relatively smaller decline in U.S. exports compared to domestic use reflects the resilience of global feed demand.
In their analysis, the Council strongly emphasizes that, despite the decreases projected for corn production, the United States remains open to trade. In the coming year, it will be vital that all exporting countries follow the U.S. example of offering open markets, transparent market information and careful planning.
Agricultural production depends each year on weather factors beyond the control of governments or farmers, but agriculture and food production are basically optimistic lines of work. Each year farmers plant with hope, doing their best with what nature provides at harvest. U.S. farmers use the best genetics, technology and management practices to grow grains for the world market. As they prepare to harvest this year's crop, they look forward to normal weather and a record harvest in 2013.
For the full report, click here.