Grain Market Outlook

May WASDE Report 2012/13 Outlook & Market Impacts for Feedgrains

May 11, 2012

Summary

In its May 10^th World Agricultural Supply and Demand Estimates (WASDE), the USDA made its initial projection of U.S. and World corn and grain sorghum supply-demand balances for the 2012/13 marketing year, running from September 1, 2012 through August 31, 2013.  The USDA projections were for record high U.S. corn production and a sizable rebuilding of U.S. feedgrain supply demand balances in the coming marketing year. 

U.S. Corn/Grain Sorghum Production Prospects for 2012: Based on the March 30^th USDA Acreage report, the USDA projected record U.S. corn planted & harvested acreage of 95.9 million acres (ma) and 89.1 ma, respectively, implicitly assuming that 92.9% of planted acreage would be harvested to grain, compared to an average of 91.1% for 2000-2011.  U.S. corn yields were projected to be 166 bu/ac, based on a 1990-2010 trend line yield and early 2012planting progress. A trend line yield for 1973-2011 with all years included equals 159 bu/ac for 2012.  The USDA projected 2012 U.S. corn production at a record high 14.790 billion bushels (bb) compared to the previous record of 13.092 bb (2009).  Using average harvested-to-planted ratios and trendline yields since 1973, projected U.S. corn production would be 13.891 bb.  The USDA projected 2012 U.S. grain sorghum production to be 335 mb, rebounding from drought-damaged U.S. production in 2011 of 214 mb.

U.S. Corn/Grain Sorghum “New Crop” Supply-Demand Prospects: USDA projections for MY 2012/13 in the May WASDE were for increased use of corn and grain sorghum at lower prices, with increased exports and feed use for both crops, while bioenergy/FSI use for both were left unchanged.  Projected MY 2012/13 U.S. corn supplies were projected to be 15.656 bb (up 16%), with total usage projected 9% higher.  Ending stocks were projected to be 1.881 bb (13.7% S/U), with projected U.S. average prices declining to the $4.20-$5.00 range.  For comparison, using the alternate projection of 13.891 bb 2012 U.S. corn production, ending stocks would be approximately 980 mb-1.100 bb (7.1%-7.9% ending stocks-to-use).  Grain sorghum ending stocks are projected by the USDA to be 42 mb (13.1% S/U), just marginally above minimum logistical “pipeline” levels of near 27 mb.

World Corn “New Crop” Supply-Demand Prospects: World corn ending stocks are projected to increase to 152 mmt (16.5% S/U) from 128 mmt (14.7% S/U) in MY 2011/12.  The USDA projects that increases in both U.S. and foreign corn production will drive these changes.  Projected Argentina corn production (25 mmt) and exports (16 mmt) in MY 2012/13 are up by 16% and 19%, respectively, from the current market year. Projected Brazilian corn production (67 mmt) and exports (12 mmt) in MY 2012/13 are unchanged and up 14%, respectively, on an annual basis. These respective crops will be planted later in 2012 with the possibility of high soybean prices affecting farmer’s planting decisions.

In May 10^th WASDE report, the USDA gave its initial forecast for the 2012/13 “new crop” marketing year, projecting record high 2012 U.S. corn acreage, yields, and production as well as increased usage and ending stocks, along with markedly lower U.S. corn prices.    

U.S. Corn Planted & Harvested Acres for 2012

The USDA projected that a record high 95.9 million acres (ma) of corn would be planted in the U.S. in 2012, based on estimates from the USDA NASS Prospective plantings report on March 30, 2012 (Figure 1). The USDA also projected that 89.1 ma of U.S. corn would be harvested, based on historical abandonment and derived demand for silage. The projected proportion of harvested-to-planted acres in 2012 of 92.9% used by the USDA is above the 2000-2011 average of 91.1%, and would be the largest harvested/planted percentage since 2000 (i.e., larger than 92.5% in 2007).  

Figure 1. U.S. Crop Planted Acreage (1973-2011) and USDA Projections for 2012

U.S. Corn Yield & Production for 2012

The USDA projected that U.S. corn yields in 2012 would be 166.0 bushels per acre, based on a linear trend for the national average yield over the 1990-2010 period with and adjustment for 2012 planting progress (Figure 2).  Given these projections of U.S. corn acreage and yields, the USDA projects 2012 U.S. corn production to be a record high 14.790 billion  bushels (bb). 

KSU Projection: A similar linear KSU yield trend projection for the 1973-2011 period with all high and low years included projects 2012 yields to be 159 bushels per acre.  If lower historic average % harvested-to-planted acreage relationships (i.e., 91.1% harvested acres and 87.36 ma harvested) and the lower KSU linear U.S. trend corn yield projection (159 bu/ac) are used, then U.S. corn production would be projected at 13.891 bb, which would be 899 mb less than the USDA’s projection of 14.790 bb.

Figure 2. U.S. Corn Yield Trend (1973-2011) and Projections for 2012

U.S. Corn Total Supplies up to 15.656 bb for MY 2012/13:

With projected MY 2011/12 beginning stocks of 851 mb (the lowest since 958 mb in MY 2004/05), 2012 production of 14.790 bb, and imports of 20 mb, total supplies of U.S. corn are projected to be 15.656 bb for MY 2011/12 by the USDA (Table 1).

KSU Projection: Alternatively, using KSU projections for 2012 of 13.891 bb U.S. corn production, total U.S. corn supplies would be 14.762 bb, down 899 mb from the USDA estimates.

Total Corn Use up to 13.775 bb in MY 2012/13

The USDA raised its projected feed use and total usage of U.S. corn from MY 2011/12 to MY 2012/13 based on expectations of a large increase in 2012 U.S. corn production (Table 1 & Figure 3). 

Ethanol Use = 5.000 bb: The USDA again left unchanged its projection of 5.000 bb U.S. corn usage for ethanol in MY 2012/13 from the previous year, citing weak gasoline consumption as a limiting factor in domestic fuel blending opportunities. 

Non-ethanol Food, Seed & Industrial Use = 1.425 bb: The USDA raised its projection of non-ethanol food, seed and industrial use of corn in MY 2012/13 to 1.425 bb (up 20 mb from the previous marketing year). 

Export Use = 1.900 bb: With its projections of larger U.S. supplies, lower prices, and strong Chinese export demand, as well as record foreign corn supplies, on balance the USDA forecast that MY 2012/13 U.S. corn exports would equal 1.900 bb.  This amount of U.S. exports which would be up from the MY 2011/12 projection of 1.700 bb and from 1.835 bb in MY 2010/11, but still lower than 1.980 bb in MY 2009/10.

Feed & Residual Use = 5.450 bb: The USDA raised its projection of MY 2012/13 U.S. corn feed and residual use up to 5.450 bb, up sharply from 4.550 bb in MY 2011/12, 4.793 bb in MY 2010/11, and 5.125 bb in MY 2009/10. The USDA projects that domestic corn feeding will increase by 900 mb due to abundant supplies, lower prices and increases in U.S. pork and poultry production.  If these projections for higher MY 2012/13 U.S. feed & residual usage hold true, it would be largest amount of U.S. corn feed and residual use since 5.858 bb in MY 2007/08. 

Total Corn Use = 13.775 bb: For “new crop” MY 2012/13, the USDA projects that total use of corn in the U.S. will be a record high 13.775 bb, up 1.110 bb from 12.655 bb in MY 2011/12.  This would be largest amount of U.S. corn usage since 13.055 bb in MY 2010/11 and from 13.066 bb in MY 2009/10.

Recent U.S. Corn Use Trends

If these projections for MY 2012/13 hold true, it would signal a significant reversal of the long term downtrend in feed and residual use, with feed use rebounding sharply  from previous year’s declines (Figure 3).  It would also signal a leveling off in the growth of ethanol use, with corn use for ethanol production being essentially unchanged  at nearly 5.000 bb for a third consecutive marketing year.  Exports and other FSI use would be within their recent historic range in MY 2012/13, while ending stocks of 1.881 bb would be the largest since 2.114 bb in MY 2004/05.

Table 1. U.S. Corn Supply-Demand Balance Sheet: MY 2007/08 - 2012/13
(May 10, 2012 USDA WASDE)

Figure 3. Trends in U.S. Corn Use & Ending Stocks: MY 2004/05-2012/13
(May 10, 2012 USDA WASDE)

“New Crop” Ending Stocks (1.881 bb) & Ending Stocks-to-Use (13.7%)  

As a result of the large increase in U.S. corn production, the USDA projected MY 2012/13 ending stocks to be 1.881 bb,  which is up from its estimate of 851 mb from in MY 2011/12, and also larger than 1.128 bb in MY 2010/11 and 1.708 bb in MY 2009/10.  The MY 2012/13 projection equals 13.7% ending stocks-to-use, which is up from 6.7% for MY 2011/12. This projection of 13.7% ending stocks-to-use in MY 2012/13 would be the largest since 13.9% in MY 2008/09, an compares to the record low of 5.0% in MY 1995/96, 8.6% in MY 2010/11, and 13.1% in MY 2009/10 (Figure 4). 

KSU Projections: If the KSU projection of 13.891 bb produced in the U.S. in 2012 is used instead of the USDA estimate – along with all other USDA usage projections for MY 2012/13 left unchanged – projected MY 2012/13 ending stocks would be 982 mb (i.e., 1.881 bb less 899 mb), with ending stocks to use projected to be 7.1% (i.e., 982 mb ÷ 13.775 bb).  This % stocks-to-use projection is likely overstated given that some price rationing of usage would occur with reduced production.  Alternatively, with price rationing of use, ending stocks of 1.100 bb would be more likely with ending stocks-to-use at 7.9%.  The key point is that with alternative assumptions regarding harvested acreage and yield trends, a markedly different and less overwhelmingly abundant supply-demand scenario occurs than what the USDA has projected in its May WASDE report.  

“New Crop” MY 2012/13 U.S. Corn Prices = $4.20-$5.00 /bu.

With much larger U.S. corn production in 2012, the USDA projects that market forces will lead to sharply lower U.S. corn prices in MY 2012/13 (Table 1 & Figure 4).  The USDA projected MY 2012/13 U.S. average corn prices to in the range of $4.20-$5.00 per bushel in MY 2012/13, sharply lower than the range of $5.95-$6.25 estimated for MY 2011/12 in the May WASDE report (Figure 4).  The midpoint of this MY 2012/13 projection of $4.60 per bushel is down from $6.10 in MY 2011/12 and $5.18 in MY 2010/11, but still above $3.55 per bushel in MY 2009/10.  

Figure 4. U.S. Corn Ending Stocks vs U.S. Avg. Cash Prices: MY 1973/74-2012/13
(May 10, 2012 USDA WASDE Report)

The USDA World Agricultural Outlook Board lowered feed and residual and total usage for the 2011/12 “old crop” marketing year in its May 10^th WASDE report (Table 1 & Figure 1).     

U.S. Corn Total Supplies for “Old Crop” MY 2011/12

With projected MY 2011/12 beginning stocks of 1.128 bb (the lowest since 958 mb in MY 2004/05), 2011 production of 12.358 bb, and imports of 20 mb, total supplies of U.S. corn are projected to be 13.506 bb for MY 2011/12.

Total Corn Use Down to 12.655 bb in “Old Crop” MY 2011/12:

The USDA lowered its projected feed use and total usage of U.S. corn for MY 2011/12 (Table 1 & Figure 1).   MY 2011/12 Ethanol Use = 5.000 bb: The USDA again left unchanged its projection of 5.000 bb U.S. corn usage for ethanol in MY 2011/12. This projection is down marginally from 5.021 bb for MY 2010/11, but up from 4.591 bb in MY 2009/10.  If this projection holds true, it would be the first year-to-year reduction in U.S. corn ethanol usage since the record tight ending stocks-to-use year of MY 1995/96 (Table 1 & Figure 1).   

Comments on recent U.S. ethanol production trends: Weekly ethanol production in the U.S. has continued its decline since December 2011, falling from a range of 938-963 thousand barrels per day (th bls/d) in December, and 934-944 th brls/d in January, down to 865-897 th bls/d in April-early May. (see the U.S. Energy Information Administration agency graph below).  The early May 2012 production of 897 th bls/d equals 37.674 million gallons per day – or if extrapolated to an annual basis approximately 13.751 billion gallons per year. This much ethanol production would require approximately 4.911 bb of corn to produce on an annual basis (assuming 2.8 gallons of ethanol are produced per bushel of corn).

MY 2011/12 Non-ethanol Food, Seed & Industrial Use = 1.405 bb: The USDA maintained its projection of non-ethanol food, seed and industrial use of corn in MY 2011/12 at 1.405 bb.  This amount of non-ethanol FSI use is marginally less than 1.407 bb of corn used for ethanol production in MY 2010/11, and just under the larger amounts of 1.416-1.422 bb during the MY 2005/06-MY 2006/07 period.

MY 2011/12 Export Use = 1.700 bb: The USDA did not change its projection of U.S. corn exports in MY 2011/12 of 1.700 bb, which is already up 50 mb from January and up 100 mb from the December 2011 USDA WASDE projection.  Even with these increases, the MY 2011/12 projection of 1.700 bb is still down from 1.835 bb in MY 2010/11 and 1.980 bb in MY 2009/10.

MY 2011/12 Feed & Residual Use = 4.550 bb: The USDA dropped its projection of MY 2011/12 U.S. corn feed and residual use by 50 mb down to 4.550 bb, down from 4.793 bb in MY 2010/11 and from 5.125 bb in MY 2009/10. The USDA projects that U.S. corn feed usage will decline markedly during the June-August period, with relatively abundant and lower cost U.S. wheat supplies being used as a substitute.  The USDA also indicated that record early plantings of U.S. corn in 2012 are likely to result in a boost in early 2012 U.S. corn crop usage prior to the start of MY 2012/13 on September 1^st, 2012.  If these projections for lower MY 2011/12 U.S. feed & residual usage hold true, it would be lowest amount of U.S. corn feed and residual use since 4.692 bb in MY 1995/96.  

MY 2011/12 Total Corn Use = 12.655 bb: For “old crop” MY 2011/12, the USDA projects that total use of corn in the U.S. will be 12.655 bb, down 50 mb from April.  With smaller available U.S. corn supplies on the one hand and some rationing of usage due to higher prices on the other, U.S. corn usage of 12.655 bb in MY 2011/12 is down from 13.055 bb in MY 2010/11 and down from 13.066 bb in MY 2009/10 – down to the smallest amount since 12.056 bb in MY 2008/09 and 12.737 bb in MY 2007/08.

Comment on market signals of extremely tight U.S. corn stocks during June-August, 2012: Since early January 2012 corn basis levels in many Kansas locations have been at least as narrow as any time in the last five years, even narrower than during “water shed” period of MY 2007/08 when futures and cash corn prices first moved to what were then record high levels (only to be eclipsed again during the summer of 2011). 

Extremely tight corn basis levels combined with small-to-inverted carrying charges in Chicago Board of Trade futures contracts in recent weeks (i.e., carrying charges being either near zero or negative from the CBOT March 2012 to May 2012 contracts, and from the May to the July 2012 contracts) are indicative of strong “demand-pull” forces in the corn market.  These market trends indicate the desire of U.S. commercial corn users to obtain supplies of U.S. corn for their later use “immediately” – and seem to be signaling that commercial corn users have concerns about the availability of adequate old corn domestic U.S. corn supplies during the June-July-August 2012 period.  

Comment on USDA projections indicating that U.S. corn usage is being rationed by high grain prices:  Just as in earlier reports, the USDA May WASDE projections of corn use continue to indicate that historically high U.S. corn prices are having a “rationing effect” on U.S. corn usage in the current marketing year. As indicated in earlier KSU newsletters, whether adequate rationing of U.S. corn usage has occurred since the 2011 fall harvest will determine whether adequate supplies will be available to meet usage needs this summer (June-July-August of 2012).

If adequate rationing of U.S. corn usage either has not occurred to data or does not occur in coming months, it is possible that serious feedgrain supply shortages could exist in summer 2012.  The USDA has indicated that it expects increased wheat usage for feed to “pick up the slack” for extremely tight corn supplies in June-August, 2012.  It appears that such a change in usage from feedgrains to wheat MUST happen in the U.S. in coming months to avoid disruptions to agribusiness operations that rely on feedgrain supplies in the coming summer months. 

U.S. Corn Ending Stocks and Prices for “Old Crop” MY 2011/12

The USDA increased its projection of MY 2011/12 ending stocks to 851 mb, which is up 50 mb from the April WASDE, but still down markedly from 1.128 bb in MY 2010/11 and from 1.708 bb in MY 2009/10 (Figure 4).  Although USDA projections of U.S. corn prices for MY 2011/12 have trended lower since earlier this summer, they continue to be at record highs – reflecting the recent two year trend toward tightening of U.S. corn ending stocks-to-use. The trend which began due to a shorter than planned for U.S. corn crop in MY 2010/11 has continued with a second U.S. corn crop below expectations in MY 2011/12.  

The USDA projected MY 2011/12 U.S. average corn prices to in the range of $5.95-$6.25 per bushel, raising $0.05 on the lower end, while declining $0.25 on the upper end of the range from April.  Current projections of MY 2011/12 prices of $5.95-$6.25 per bushel are up from $3.55 in MY 2009/10 and $5.18 in MY 2010/11.  

The USDA projected that U.S. grain sorghum production would rebound sharply in 2012 from a short crop in 2011, and that exports, feed use, and ending stocks would increase in MY 2012/13 – and that prices would also decrease - as a result  (Table 2). 

Table 2. U.S. Grain Sorghum Supply-Demand Balance Sheet: MY 2007/08 through MY 2011/12      (May 10, 2012 USDA WASDE Report)

Grain Sorghum Production & Total Supplies for “New Crop” MY 2012/13

Projected U.S. planted acreage of 6.0 ma in 2012 is up from the previous two years (i.e., from 5.5 ma in 2011 and 5.4 ma in 2010), but less than 6.6 ma in 2009.  Projected U.S. harvested acreage of 5.2 ma in 2012 is also up from the previous two years (i.e., from 5.5 ma in 2011 and 5.4 ma in 2010), but below 5.5 ma in 2009.  The USDA’s projected U.S. grain sorghum average yield in 2012 of 65.0 bu./acre compares to 54.6 bu/ac in 2011, 71.8 bu/ac in 2010, and 69.4 bu/ac in 2009. 

Grain sorghum production in the U.S. is projected to be 335 mb in 2012, which compares to 214 mb produced in 2011, 346 mb in 2010, and 383 mb in 2009.  A combination of acreage reductions and drought in 2011 in major U.S. grain sorghum production areas in the central and southern plains is responsible for declining production over the 2009-2011 period.

Beginning stocks are projected to be 27 mb in MY 2012/13, unchanged from MY 2011/12 but down from 41 mb in MY 2010/11.  With projected 2012 U.S. production of 335 mb and no appreciable imports of grain sorghum, the USDA projected total U.S. grain sorghum supplies in MY 2012/13 to be 362 mb, up from 242 mb in MY 2011/12, but down from 387 mb in MY 2010/11 and from 438 mb in MY 2009/10. 

Grain Sorghum Usage for “New Crop” MY 2012/13

 United States grain sorghum exports for MY 2012/13 are projected to be 140 mb, up 133% from 60 mb in MY 2011/12, but still less than 150 mb in MY 2010/11 and 166 mb in MY 2009/10.  Food, seed and industrial use in the U.S. was projected to be 90 mb for MY 2012/13, unchanged from MY 2011/12, and comparable to 85 mb FSI use in MY 2010/11 and 90 mb FSI use in MY 2009/10.  The USDA projected U.S. grain sorghum feed and residual use to be 90 mb in MY 2012/13, which is up from 65 mb in MY 2011/12, but down from 124 mb in MY 2010/11 and 141 mb in MY 2009/10.  During the MY 2007/08 through MY 2011/12 period, the declining availability of U.S. grain sorghum caused reductions in U.S. grain sorghum usage in all major use categories except for bioenergy production (Figure 5).  The USDA’s projected increase in supplies and usage for MY 2012/13 is projected to “break” these downward trends in export and feed & residual usage.

Projected total U.S. grain sorghum use of 320 mb for MY 2012/13 is up from 215 mb in MY 2011/12, but still less than 359 mb in MY 2010/11 and 396 mb in MY 2009/10. 

Figure 5. Trends in U.S. Grain Sorghum Use & Ending Stocks During MY 2004/05 thru MY 2012/13 (May 10, 2012 USDA WASDE Report)

Grain Sorghum Ending Stocks & Prices for “New Crop” MY 2012/13

The USDA made its projections of U.S. grain sorghum ending stocks and prices for MY 2012/13 with the idea that a level of near 27 mb ending stocks for U.S. grain sorghum generally acknowledged as a minimum logistical “pipeline” levels for agribusiness use, and that projected MY 2012/13 U.S. grain sorghum prices expected to closely follow movements and trends in the U.S. corn markets.  

U.S. Grain Sorghum ending stocks were projected at 42 mb (13.1% S/U) in MY 2012/13, compared to 27 mb (12.6% S/U) in MY 2011/12 and 27 mb (7.5% S/U) in MY 2010/11 (Table 2).  The USDA projected MY 2012/13 U.S. average grain sorghum prices to be in the range of $3.85-$4.65 per bushel, down from the range of $5.85-$6.15 in MY 2011/12 and from $5.02 in MY 2010/11, but up from $3.22 in MY 2009/10.  

World and U.S. demand growth in the form of bioenergy use and livestock feed usage continues to be a key factor explaining continued record high U.S. corn prices (Figure 6). 

Figure 6. World Corn Usage & Ending Stocks: MY 2007/08 thru 2012/13
(May 10, 2012 USDA WASDE)

World Corn Supply-Demand Balances MY 2012/13

Projected World corn production of 945.76 mmt for MY 2012/13 is up 8.7% from 870.45 mmt in MY 2011/12, and up from 829.12 mmt in MY 2010/11 and 819 mmt in MY 2009/10.  Projected World corn use of 921.01 mmt in MY 2012/13 is up markedly from 867.32 mmt in MY 2011/12, from 849 mmt in MY 2010/11 and from 823 mmt in MY 2009/10. 

Projected World corn ending stocks of 152.34 mmt for MY 2012/13 are up 19.4% from 127.56 mmt in MY 2011/12, and also up from 124.43 mmt in MY 2009/10 and 144 mmt in MY 2009/10.  World corn % ending stocks-to-use are projected at 16.5% in MY 2012/13, up from 14.7% in both MY 2011/12 and MY 2010/11.

World Corn Exports in MY 2012/13

Projected World corn exports of 104.22 mmt are projected to be up from 96.97 mmt in MY 2011/12, and is also up from 91.35 mmt mmt in MY 2010/11. 

Larger exports in MY 2012/13 are projected for the United States (48.26 mmt, up from 43.18 mmt last year and 46.63 mmt two years ago), Argentina (16.0 mmt, compared to 13.5 mmt last year, and 16.32mmt the year before ), Brazil (12.0 mmt, compared to 11.5 mmt last year, and 8.4 mmt the year before ), South Africa (2.0 mmt, compared to 1.5 mmt last year, and 1.48 mmt the year before ), and Canada (0.5 mmt, compared to 0.4 last year, and 1.71 mmt the year before ). Exports from the Ukraine (14.0 mmt, unchanged from last year and up from 5.01 mmt two years ago) are projected to be unchanged.

Lower exports in MY 2012/13 are projected for the European Union-27 (2.0 mmt, down from 2.50 mmt last year, but up from 1.08 mmt the year before). 

Comments on U.S. competitor’s corn export prospects: Brazilian corn export prospects for MY 2012/13 were projected higher based on projections of continued high 2012/13 corn production by the same amount - up to 67.0 mmt as in MY 2011/12, and up compared to 57.4 mmt in MY 2010/11.  Argentina corn production projections for 2012/13 are at 25.0 mmt, up from 21.5 mmt in MY 2011/12 and 23.6 mmt in MY 2010/11.  An increase in projected MY 2012/13 Ukraine corn production – up to 24.00 mmt from 22.84 mmt in MY 2011/12 and up from 11.92 mmt in MY 2010/11, is the major factor driving projections of MY 2011/12 Ukraine corn exports up from 5.01 mmt two years ago to 14.0 mmt both in MY 2011/12 and MY 2012/13.  

World Corn Imports in MY 2012/13

Projected World corn imports of 98.82 mmt are up from 93.46 mmt in MY 2011/12 and from 92.69 mmt in MY 2010/11. 

Larger imports in MY 2012/13 are projected for Japan (16.0 mmt, up from 15.5 mmt last year and 15.65 mmt the year before), Egypt (5.2 mmt, up from 5.0 mmt last year, but down from 5.8 mmt two years ago), European Union-27 (6.0 mmt, up from 5.0 mmt last year and compared to 7.4 mmt the year before), China (7.0 mmt, up from 5.0 mmt last year and 1.0 mmt two years ago), Southeast Asia (6.55 mmt, up from 6.4 mmt last year, but down from 7.4 mmt two years ago), and South Korea (8.5 mmt, up from 7.5 mmt last year and 8.1 mmt the year before).

Lower imports in MY 2011/12 are projected for Mexico (9.3 mmt, down from 10.5 mmt last year, but up from 8.3 mmt two years ago) and Canada (0.5 mmt, down from 0.9 mmt last year and from 0.95 mmt the year before).

Comments on World corn import trends: The increase in projected Chinese corn imports of 2 mmt up to 7.0 mmt holds the most potential to affect U.S. corn exports, given questions that have arisen recently about uncertain Chinese corn production estimates.  If recent Chinese corn production figure have been overstated, it would result in increased U.S. and South American corn export sales, tighter World, U.S. and South American ending stocks, and improved World corn price prospects.

World Coarse Grain Supply-Demand Balances

Projected World coarse grain production of 1,228.4 mmt in MY 2012/13 is up from 1,142.4 mmt in MY 2011/12 and 1,096.6 mmt in MY 2011/11.  World coarse grain supplies is also projected to be higher, as projected total supplies of 1,389.2 mmt in MY 2012/13 compare to 1,304.9 mmt in MY 2011/12 and 1,292.1 mmt in MY 2010/11.  The category of “coarse grains” includes corn, grain sorghum, barley, oats, rye and mixed grains. 

Projected World coarse grain use is projected to be 1,204.3 mmt in MY 2012/13, which is up from 1,143.7 in MY 2011/12 and from 1,129.6 mmt in MY 2010/12.  Projected World coarse grain trade of 131.3 mmt in MY 2012/13 compares to 123.1 mmt in MY 2011/12 and 116.3 mmt in MY 2010/11.  These changes leave projected World coarse grain ending stocks at 184.9 mmt in MY 2012/13, up markedly from 161.2 mmt in MY 2011/12 and from 162.4 mmt in MY 2010/11.  World coarse grain % ending stocks-to-use is estimated at 15.4% in MY 2012/13, up from 14.1% in MY 2011/12 and from 14.4% in MY 2010/11.

Foreign Coarse Grains: Foreign coarse grain supplies are projected to be more abundant in the coming year.  Larger foreign coarse grain production is projected with 838.2 mmt in MY 2012/13 which is up from 818.7 mmt in MY 2011/12 and 766.4 mmt in MY 2010/11.  Foreign coarse grain total supplies of 972.6 mmt for MY 2012/13 are up from 946.1 mmt in MY 2011/12 and 911.2 mmt in MY 2010/11.  These supply increases combined with an increase in foreign coarse grain usage to 890.9 mmt (up from 854.1 mmt in MY 2011/12 and 831.7 mmt in MY 2010/11) lead to increased projected foreign coarse grain ending stocks of 133.8 mmt in MY 2012/13 (down from 137.0 mmt last year, but up from 130.1 mmt two years ago).  Foreign coarse grain % ending stocks-to-use is projected to decline from the previous two years, falling from 15.6% S/U in MY 2010/11, to 16.0% S/U in MY 2011/12, down to 15.0% S/U in MY 2012/13.