Record US corn crop to cool red-hot prices-FAPRI

Reuters  • Posted: Tuesday, March 6, 2012

* Rapid growth in ethanol industry has slowed

* Think tank sees smaller corn crop than USDA

* Plantings of eight major crops up 2 pct in 2012

* Price volatility will continue, says FAPRI

WASHINGTON, March 5 (Reuters) – U.S. farmers will harvest a record corn crop this year, which will rebuild stockpiles and bring down prices, a University of Missouri think tank projected in a report on Monday that came in 2.5 percent lower than the most recent U.S. government projection. The Food and Agricultural Policy Research Center, or FAPRI, projected a corn crop of 13.916 billion bushels, 6 percent larger than the record set in 2009, based on the second-largest plantings since World War Two.

The U.S. Agriculture Department projected a crop of 14.27 billion bushels on Feb. 24 at its annual outlook conference. Like USDA, FAPRI estimated a soybean crop of 3.243 billion bushels. The think tank pegged U.S. wheat at 2.239 billion bushels and upland cotton at 18.09 million bales. “The rapid growth in corn ethanol production has slowed,” said FAPRI in a briefing book. It estimated corn-for-ethanol would grow to 5.07 billion bushels in the marketing year that ends 2013, compared with 4.994 billion bushels this marketing year.

U.S. corn yields were below normal in 2010 and 2011. With a return to trend-line yields, “the resulting large increase in production should allow some stock rebuilding that would

moderate prices,” said the briefing book. Corn prices would average $4.81 a bushel at the farm gate under FAPRI’s projection, compared to $5.96 a bushel for the

2011 crop.

FAPRI projected slightly smaller corn plantings and a smaller crop than USDA, which projected plantings at 94 million acres (38 million hectares), and a farm-gate price of $5 a

bushel. FAPRI projected 2012/13 end stocks of 1.346 billion bushels while USDA projects 1.616 billion bushels. USDA says 801 million bushels will be on hand when 2012/13 begins.

USDA and FAPRI have nearly the same figure for the soybean crop — USDA says 3.25 billion bushels compared with FAPRI’s 3.243 billion bushels. But they differ on 2012/13 end stocks.

USDA projected 205 million bushels and FAPRI 301 million bushels, due to smaller exports.

“Price volatility will continue,” said FAPRI in discussing the outlook for U.S. crops in coming years. It said corn prices could range from under $3.50 a bushel to more than $6 a bushel

in any given year.

Like USDA, FAPRI expects plantings of the eight major crops to increase by about 5 million acres, or 2 percent, this year. It would be the largest total since 1998 according to USDA data.

Plantings of 8 major U.S. crops (in mln acres)