The U.S. corn crop may rise as farmers plant the most acres since World War II, easing pressure on higher food and fuel prices, the government said. Soybean planting may be little changed while wheat expands.
Farmers will sow corn on 94 million acres, up 2.3 percent from last year and the most since 1944, Joe Glauber, the chief economist for the U.S. Department of Agriculture, said today at a conference in Arlington, Virginia. The forecast was less than the 94.329 million expected by analysts in a Bloomberg News survey, and unchanged from an estimate in the USDA’s 10-year baseline report, released Feb. 13.
Rising corn output and slowing demand for use in ethanol may boost U.S. inventories of the grain that shrank to a 16-year low in the past year. Average corn prices received by farmers in 2012 will be $5 a bushel, down 19 percent from last year, while wheat prices will slide 14 percent and soybeans may drop 1.7 percent, Glauber said.
“While supplies still remain tight for feed grains, slowing growth in biofuels and a return to trend yields should result in a rebound in corn stocks this year,” Glauber said in a speech. “Over time that should help relieve some of the volatility that has roiled markets over the last several years.”
Soybean planting may be unchanged from last year at 75 million acres, Glauber said. That’s above the 74 million forecast in the baseline report. Wheat seedings may increase 6.6 percent from last year to 58 million acres, above the Feb. 13 forecast of 56.5 million.
As of yesterday, corn prices had dropped 0.8 percent this year on the Chicago Board of Trade to $6.4125 a bushel, while wheat slid 1.1 percent. Declining prices have sent global food costs down 9.9 percent from a record in February 2011, United Nations data show. U.S. consumers will pay 2.5 percent to 3.5 percent more for food in 2012, unchanged from last month’s forecast, Glauber said.
“Where it looked like earlier this year we would see a bout of new inflation, now it looks like it will moderate,” he said.
The USDA said Feb. 13 that U.S. corn production would climb to a record 14.235 billion bushels, while increasing yields would boost soybean output to 3.215 billion bushels and the wheat harvest may rise to 2.12 billion. Glauber didn’t update production forecasts in his speech today.
The USDA’s projection for U.S. acreage was “very much expected” by traders, Steve Kahler, a managing director at Teucrium Trading, said in an interview in Arlington after Glauber’s speech. Corn futures for May delivery fell 0.3 percent to $6.395 a bushel at 11:40 a.m. in Chicago.
“The record high prices we’ve seen the last couple of years is financial incentive for people to plant fence row to fence row,” said Kahler, whose company sponsors exchange-traded funds for commodities ranging from corn to natural gas. “Given that we’ve had a tight-ending-stocks situation, people are really looking to the next crop year to resolve the deficit in supply.”
U.S. agricultural exports in the year that began Oct. 1 may total $131 billion, down $1 billion from the USDA’s forecast in November and below last year’s record, Glauber said.
China’s Soybean Purchases
China, the world’s biggest soybean consumer, last week signed agreements in Iowa and California to purchase 13.4 million tons of the oilseed from the U.S. by Aug. 31, 2013, coinciding with Vice President Xi Jinping’s visit to those states. On Feb. 17, U.S. exporters sold 2.923 million tons to China, the biggest one-day deal on record.
Ethanol makers may use 4.95 billion bushels of corn this year, 50 million bushels less than a year earlier, Glauber said. Corn stockpiles will “likely increase” over the next year, easing costs for livestock producers, he said.
“The corn market has been so strong the last several years that in my neighborhood, the number of acres going to corn basically has maxed out,” Jon Holzfaster, a third-generation farmer in Paxton, Nebraska, said in a telephone interview before Glauber’s speech. “If Mother Nature sees fit to let everyone have a decent production year, we can produce enough bushels to bring this market back down.”