USDA predicts record corn harvest
Several major food and ingredient companies have struggled to cope with record-high corn costs. Industry giants such as Kraft, Sara Lee and ConAgra all increased prices last year to improve margins against increased commodity costs, and grain processing multinational Archer Daniels Midland saw profits slump 89% in January as it failed to keep up with higher corn costs.
However, the latest forecast from the USDA predicts record production of 14.8bn bushels – up 2.4bn on those harvested in 2011-12. And food manufacturers may benefit from increased supply from as early as late summer due to early planting.
“Record mid-April corn plantings and early May crop emergence boost prospects for early 2012-crop corn usage before the September 1 beginning of the 2012/13 marketing year,” it said.
The USDA estimates that an extra 5.1m acres are likely to be harvested, with yield projected at a record 166 bushels per acre, about 2 bushels above the 1990-2010 trend.
US corn use is projected to grow about 9% in 2012-13, the department said, with increased demand for sweeteners, starches and animal feed, and larger exports.
End-of-year corn stocks are also expected to be higher for 2012-13, projected at 152.3m tonnes, up 25% from last year’s levels, and the highest since 2000-1. The USDA projects a season-average farm price of $4.20 to $5 a bushel, down sharply from the 2011-12 level, which is set for a record $5.95 to $6.25 a bushel.
Last year’s corn harvests were hit globally by flooding followed by high temperatures in the Midwest, poor weather in Argentina and Russia, and higher fuel costs, which contributed to an increase in prices of the three key US grain commodities, corn, wheat and soybeans, causing diminishing stocks amid growing demand.
There are several factors that could mean the crop fails to meet the USDA’s current expectations for 2012-13 however, such as adverse weather conditions, as this is the department’s first crop projection of the growing season.