Corn supplies will stay tight in the U.S., the largest grower and exporter, even as greater planting spurs record production, the U.S. Department of Agriculture’s chief economist said. Soybean and cotton crops may also increase.
Farmers will harvest a record 13.73 billion bushels of corn this year, up from 12.447 billion last year, on 92 million planted acres, Joe Glauber, the economist, said today at a USDA forum near Washington. Greater demand for livestock feed and ethanol will limit gains in stockpiles next year, after dropping to the lowest level since 1996, he said. Prices are up 80 percent in the past year on the Chicago Board of Trade.
“Despite an increase in acres, the corn market is going to remain tight,” Glauber said. “It points to the fierce competition for acreage this spring.”
Tighter supplies helped boost global food costs by 25 percent last year, reaching the highest ever last month, according to the United Nations. Rising demand also is helping to boost net-farm income in the U.S. by 20 percent this year to a record $94.7 billion, the USDA said earlier this month. U.S. farm exports will jump 25 percent to a record $135.5 billion in fiscal 2011, Glauber said today.
Corn supplies on Aug. 31, 2012, will total 865 million bushels from 675 billion expected this year, Glauber said. Five billion bushels will be devoted to ethanol, compared with 4.95 billion for the 2010 crop. Glauber said.
Soybean output in the U.S., the world’s largest grower and exporter of the oilseed, will rise to 3.345 billion bushels this year from 3.329 billion in 2010, on a record 78 million planted acres, Glauber said. End-of-year inventories will be at 160 million bushels, an increase of 20 million bushels, according to the USDA.
Wheat production will be 2.08 billion bushels, down from 2.208 billion in 2010, because of lower yields even as acreage rises to 57 million acres from 53.6 million acres, Glauber said. U.S. wheat exports are forecast at 1.15 billion bushels, down almost 12 percent from this year’s 1.3 billion bushels. Stockpiles before the next harvest are forecast to fall to 663 million bushels on higher food and feed use.
Overseas purchases of agricultural products from the U.S., the largest exporter of wheat and cotton, probably will jump $26.8 billion in fiscal 2011 from the year that ended on Sept. 30, Glauber said. China is forecast to be the top market for U.S. agricultural exports at $20 billion, surpassing Canada’s $18.5 billion, he said. Imports will be a record $88 billion.
Grain demand is rising worldwide. Saudi Arabia’s cereal imports may reach a record this year, the UN said Feb. 3. Algeria, Morocco, Iraq, Bangladesh, Turkey and Lebanon have issued tenders to buy wheat or rice this month, as food inflation stoked political unrest that toppled governments in Tunisia and Egypt.
Egypt ordered 120,000 tons of soft-red winter wheat from the U.S. on Feb. 22. Wheat purchases by Algeria, North Africa’s largest importer after Egypt, climbed to 1.75 million tons in January, according to Goldman Sachs Group Inc.
Cotton production will rise to 19.5 million bales from 18.32 million in 2010, with supplies on July 31, 2012, projected at 2.9 million bales, up from 1.9 million this year, Glauber said. A bale weighs about 480 pounds (218 kilograms). Acreage will rise to 13 million acres from 10.97 million.
Corn prices for farmers will average $5.60 a bushel in the marketing year that begins Sept. 1, compared with an estimated $5.40 this year, Glauber said. The average farm price for soybeans next season may rise to $13 a bushel from $11.70 in the current year, and wheat may rise to a record $7.50 a bushel from $5.70, he said. The average cotton price will be a record $1.10 a pound, up from 81.5 cents this year.
Low grain supplies will increase livestock and dairy prices, with beef costs reaching a record as production declines 1.5 percent, Glauber said. Pork output will fall 0.4 percent.
Steers are expected to average $1.02 to $1.09 a pound this year, up from 95 cents last year, while hogs will reach 58 cents to 61 cents, an increase from 55 cents in 2010. The all-milk forecast will reach $17.70-$18.40 for 100 pounds, an increase from $16.29 the previous year, as milk production rises 1.8 percent.
Depleted crop supplies will take more than a year to rebuild, Glauber said. A record corn yield of 164.7 bushels, higher than the department’s forecast, would still leave ending stockpiles at 1.1 billion bushels. Corn would need to reach 100 million planted acres at that productivity level to reach 1.7 billion bushels seen in 2010, he said.
“It is likely that the tight stocks-to-use situation will not be entirely mitigated over the course of one or even two growing seasons,” Glauber said in his statement. “This will mean continued high costs for feed which will keep margins for livestock producers at low levels,” he said.
U.S. farmers are stepping up production as global inventories for all grain drop 13 percent before the next harvest, the USDA estimates. The decline is the first since 2007, when food costs sparked more than 60 riots from Haiti to Egypt, and a jump in prices this year has contributed to unrest in North Africa and the Middle East.
Rising demand has caused isolated food shortages and sparked inflation in poorer countries even as it boosts incomes for farmers.
Corn is the biggest U.S. crop, valued at a record $66.7 billion in 2010, followed by soybeans at $38.9 billion, also an all-time high, government figures show.