 "The 2009 crop would need to be near 12.2 billion bushels to
support consumption at that level," said Darrel Good. "Assuming
a trend yield of 152.8 bushels, 79.8 million acres of corn would
need to be harvested to produce 12.2 billion bushels. About 87
million acres of corn would need to be planted in 2009, then, to
meet expected consumption."The market likely believes that
less than 87 million acres of corn will be needed in 2009 since
a trend yield above 152.8 bushels is generally assumed. Each
bushel above 152.8 reduces the needed acreage by about 500,000."
In its preliminary analysis, the USDA expects 2009 corn
acreage to be near the 2008 level of 86 million, he added.
Private estimates for the March 31 Prospective Plantings report
are as low as 81 million acres.
Good's comments came as he reviewed projections of U.S. corn
consumption, noting that the USDA's updated projections during
the current marketing year serve as a reminder of the central
role that market size will play over the next several months.
"The level of corn consumption this year will determine the
magnitude of year-ending stocks, influence expectations for use
next year and influence the amount of corn acreage needed in
2009," he said.
In the March 11 update, the USDA lowered the projection of
U.S. corn exports for the current marketing year by 50 million
bushels, to 1.7 billion bushels. That projection is 300 million
bushels less than the projection of last fall, 736 million less
than the record exports of 2007-08 and represents the smallest
exports in six years.
USDA weekly reports show cumulative export shipments through
the first 27.6 weeks of the marketing year at 851 million
bushels. Assuming that Census Bureau estimates exceed USDA
estimates by 50 million bushels (as they did in the first five
months of the marketing year), cumulative exports are at 901
million bushels.
"To reach 1.7 billion, exports during the last 24.6 weeks of
the year will need to average 32.5 million bushels per week,
almost identical to the average so far this year," Good said.
As of March 5, the USDA reported that 373 million bushels of
U.S. corn had been sold for export but not yet shipped.
"New sales, then, need to average only 16.7 million bushels
per week in order for sales to reach 1.7 billion bushels," he
said. "Weekly sales since mid-January averaged 42.2 million
bushels per week.
"It now appears that exports could exceed the latest USDA
forecast, particularly since Census Bureau estimates through
January remain well above cumulative USDA estimates."
The USDA increased the forecast of the amount of corn to be
used for ethanol production during the current marketing year by
100 million bushels, to a total of 3.7 billion. The forecast is
674 million bushels more than used in that category last year.
[to top of second column] |
"The USDA cited record ethanol use in December, continuing recovery
in the production of gasoline blends with ethanol and more favorable
blender margins as reasons for the increase," he noted. "The
projection implies that ethanol production and use will proceed at a
rate that exceeds the minimum required by the Renewable Fuels
Standards.
"That projection appears a little optimistic."
Spot market margins for ethanol producers have dropped to the
lowest level since USDA began reporting plant level prices in
January 2007, he noted.
"Ethanol prices, then, may have to continue to exceed energy
value plus the 45-cents-per-gallon blender tax credit in order to
ensure sufficient ethanol production to meet the mandated level of
consumption," he said. "The necessity for ethanol prices to exceed
value suggests that blenders will blend only the minimum amount of
ethanol required. An increase in the maximum blend level would not
overcome the lack of economic incentives to blend more ethanol.
"The outlook for ethanol production to be driven by the RFS
appears to be supported by the positive values being paid for
previous excess production to meet the current year's mandate."
For the 2009-10 marketing year, the RFS implies that even more
corn will be used for ethanol production. The minimum level of use
of renewable biofuels is 10.5 billion gallons in 2009 and 12 billion
gallons in 2010. The 1.5-billion-gallon increase represents about
500 million bushels of corn.
"We suspect that U.S. corn exports will also recover during the
2009-10 marketing year on the basis of smaller grain crops in the
rest of the world and perhaps some economic recovery in 2010," said
Good.
"Domestic feed and residual use of corn during the upcoming
marketing year will likely continue to decline under the weight of
increased production of distillers grain. Some rebuilding of
livestock production, however, may occur in 2010."
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental
Sciences]
 |
