 Good quoted the USDA's weekly Crop Progress report in saying that 6
percent of the corn acreage in the 18 major producing states was
harvested as of Aug. 26 and 10 percent was harvested as of Sept. 2,
implying about 9 percent of the acreage was harvested by the end of
August. Harvest progress by the end of August last year, and the
average for the previous five years, was about 2.5 percent, Good
said.
"If the average yield of the harvested acreage this year was near
the average of 122.8 bushels forecast for the U.S, then about 965
million bushels were likely harvested in August, compared to about
310 million bushels likely harvested in August last year," Good
said. "However, this year the most advanced harvest progress,
relative to average and to that of last year, was in Kansas,
Kentucky, Missouri and Tennessee, where state average yields are
projected to range from 70 to 91 bushels, or 36 to 53 bushels below
the national average yield."
Harvest progress in Southern states not included in the 18-state
report was well advanced by the end of August, but with progress
well ahead of last year's pace only in Arkansas and to a lesser
extent in Louisiana. Progress was behind that of last year in the
other Southern states.
"It seems likely that new-crop corn available before Sept. 1 this
year was about 600 million bushels larger than the availability of a
year ago," Good said.
The question is how much of the newly harvested crop was actually
consumed in August.
Good said the degree of substitution of new-crop for old-crop
corn in August has implications for the magnitude of old-crop corn
still in inventory on Sept. 1. He explained that regardless of how
new-crop corn was consumed in August -- feed, export or domestic
processing -- it will be reflected in the balance sheet in the feed
and residual category.
The USDA has forecast the Sept. 1 inventory of old-crop corn at
1.181 billion bushels, implying consumption of old-crop corn during
the fourth quarter of the 2011-12 marketing year at 1.974 billion
bushels.
"Based on weekly export inspections through August and Census
Bureau export estimates through July, we estimate fourth-quarter
exports at 285 million bushels," Good said. "That compares to 290
million bushels implied by USDA's forecast of marketing year
exports."
Based on weekly estimates from the U.S. Energy Information
Administration, ethanol production during the fourth quarter of the
2011-12 marketing year was about 6 percent less than in the previous
year, implying corn consumption of 1.193 billion bushels during the
quarter for ethanol and byproduct production.
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"If consumption for other processing uses was near the 331
million bushels implied by the USDA's projection of use for the
year, total processing uses of corn during the quarter were near
1.524 billion bushels," Good said.
"If the USDA projection of year-ending old-crop inventories of
1.181 billion bushels is correct, implied feed and residual use
during the quarter was between 160 (million) and 165 million
bushels. That compares to implied use of 448 million bushels last
year and 495 million bushels in 2010. The implication is that at
least one-third of the crop harvested before Sept. 1 was used in
place of old-crop corn, mostly during the last half of August," he
said.
A second issue associated with the early corn harvest is whether
respondents to the USDA's survey will correctly report old-crop
inventories. The USDA specifically asks respondents to report
inventories of corn harvested in 2011 or earlier years.
"For the most part, producers should have little difficulty
differentiating between new- and old-crop stocks stored on the
farm," Good said. "In some cases, however, commercial facilities
storing corn received in late August may not be able to
differentiate between old and new crop, but errors should be mostly
offsetting. Reporting errors, then, should be the result of
respondents who incorrectly report total inventories rather than
old-crop inventories only," he said.
According to Good, the Sept. 1 estimate of old-crop corn stocks
can have important price implications in some years, particularly
when stocks are relatively small and the new crop is also expected
to be small, like this year. This year, however, the market will
have some difficulty interpreting the stocks number as it will
reflect both the total magnitude of consumption during the quarter
and the degree of substitution of new-crop for old-crop corn in
August, without revealing the magnitude of either.
"That mystery will be at least partially solved with the Dec. 1
stocks estimate to be released in January 2013," Good said.
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental
Sciences]
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