Source: John Michael Riley, Asst. Extension Professor, Department of Agricultural Economics, Mississippi State University
USDA released their annual Prospective Plantings report and quarterly Grain Stocks reports prior to the Good Friday holiday (Mar 28). The more surprising of the two was the stocks report, which held quite a shock for corn supplies. Corn in storage across the U.S. on March 1st totaled 5.400 billion bushels -- down from 6.023 billion last year but much higher than the 5.030 billion expected. Soybean and wheat stocks were higher than expected as well, but not to the degree of corn. Stocks of soybeans totaled 0.993 billion bushels -- down from last year's March 1 stocks of 1.374 billion but higher than the 0.947 expected. Wheat stocks totaled 1.234 billion bushels on March 1 -- up from last year's stocks of 1.199 billion and higher than the 1.167 expected.
Others have noted the decrease in ethanol production as one factor that led to the smaller corn use. Year-over-year ethanol production has been lower each week since the middle of June 2012. The quarterly stocks report covers the period from December through February and over that time frame ethanol production was down an average of 13.9% per week compared to the prior year. Also noted as a reason for the drop in corn consumption is the increased use of beta-agonists in cattle feeding, which can increase carcass weights without increasing feed intake. Still, much of this was supposedly accounted for prior to the report, yet the reported value was well outside the high end of the range of expectations. This resulted in a break in corn futures and cash prices for Thursday and Monday (with Friday being a holiday).
Now moving to the highly anticipated but more mundane Prospective Plantings report that showed acres largely in-line with pre-report expectations. Corn acres are forecast at 97.282 million nationally (almost equal with 2012's plantings of 97.155 million and with expected acres of 97.247). Soybean acres are forecast at 77.126 million (down 0.1% from last year and down 1.8% from expected). Wheat acres are forecast at 56.44 million (up 1.3% from 2012 and up 0.1% from pre-report expectations).
A more in depth review of the forecasted acreage is depicted in table 1. Most notably, table 1 reports the intended acres for the top 25 states (accounting for 96.6% of the forecasted 2013 total U.S. acres) along with the change compared to last year. Also in table 1 is the trend adjusted yield estimate for each individual state as well as the increase in average corn planted acres compared to average acres prior to the sharp increase in corn price.
To conclude, as can be seen in the table, the Midwest/Cornbelt states appear to either be holding steady or pulling back with respect to corn planted acres. On the other hand, the mid-South has taken on large tracts of corn acres. For example, Mississippi producers plan to devote more than one million acres to corn for the first time since 1960 and have increased average corn acres 77.8% (2009 to 2013 average versus 2001 to 2005 average). Similar events have occurred in Arkansas and Louisiana and often at cotton’s expense (with cotton byproduct feeds becoming increasingly hard to procure). The very late freeze that occurred last week had many in this region nervous since planting has been underway for a few weeks. As of Sunday (March 31), respectively, 22%, 95%, and 44% of Arkansas, Louisiana, and Mississippi corn had been planted with 3%, 49% and 2% emerged. As such Louisiana’s crop stands the most to lose from the freeze, but of note in Mississippi where planting is on par with the five-year average (44% compared to 43%), emergence is well behind average (2% versus 16%) and likely suffering from cold soil temperatures. The Mississippi state corn specialist highlighted this concern with me, and thinks the uniformity of the crop will be impacted likely leading to lost yield potential. Arkansas and Tennessee could face similar problems (22% planted through March 31, 2013 versus 32% on average in Arkansas with 3% currently emerged versus 8% on average) but the issue is less severe as of now.
Cash fed prices improved last week with live prices being up $2-$3 per hundredweight and prices were up $6-$7 per hundredweight on a dressed basis. Wholesale boxed beef prices declined as Choice carcasses finished with a weekly average of $189.82 per hundredweight, down $3.75. Oklahoma feeder steers showed a slight improvement, while steer calves were slightly lower compared to the previous week. Corn prices were lower at $7.22 per bushel. Dried distiller’s grains were $5.60 per ton lower, while MWDGS were mostly steady.