US corn stocks dwindle, but record crop looms

Focus on Futures - Corn

The March 30 quarterly stocks report confirmed that near-term US corn supplies were very tight. Inventories as of March 1 were reported at 6.009 billion bushels, 140.75 million bushels below the average trade guesstimate and close to 500,000 million bushels below stock levels the same time last year. The March USDA crop report estimated ending stocks as a percentage of consumption at 6.2%, already the lowest level since 1995-96. If disappearance continues at this pace through the end of the marketing year, the carryover would be the lowest in modern history.

The planting intentions report was released concurrently with the stocks report and tempered the bullishness. US farmers are expected to plant a modern-day record 95.864 million acres to corn, 3.943 million acres more than they did for the 2011-12 crop, but far more significant, 1.144 million acres above the trade guesstimate. And estimates from private forecasters have been growing since the report was released. On April 3, Informa Economics raised its estimate to 96.4 million acres.

The market’s reaction in the trading session following the release of the reports was in sync with their implications. Old crop months May and July rose the 40¢-per-bushel daily trading limit, while new-crop December rose only 16¢ per-bushel, widening the spread, which was already indicating near-term tightness to be alleviated by a monster harvest in the fall (Charts 1, 2, and 3).

Chart 1Chart 3

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