Nogger's Blog

23/02/12 -- Day one of the USDA's Outlook Forum is underway, and it's begun with early thoughts on plantings for the 2012 US harvest. I thought that they usually came out with the acreage numbers on day two, but apparently not.

Corn acres came in bang on expectations (and in line with last week's baseline projections) at 94 million acres, up 2.3% from last season's 91.9 million and the largest area given over to corn since 1944. Soybean area came in similar to last season, but a million above the baseline figure at 75 million acres. Wheat area was 1.5 million above last week's number and 6.6% up on last year at 58 million acres.

Using an average 8% abandonment rate, if yields were to return to the trendline 164 bu/acre then that would give us a record 14.2 billion bushel crop in 2012, That's 360.7 MMT, a jump of nearly 15% on 2011. Corn demand from the ethanol sector is seen falling in 2012/13 which would lead to a very sharp rebound in ending stocks if US growers were to conform AND be able to get yields at 164 bu/acre, but they've only achieved the latter once before - in 2009 when yields averaged 164.7 bu/acre.

The USDA went on to say that they see an average corn price of USD5/bu in 2012/13.

On the face of it the numbers are bearish, even if not surprising, so it will be interesting to see how the market reacts this afternoon.