What is in this article?:
- Global corn and the U.S. drought
- U.S. corn exports
- Market prices will increase the supply of corn and substitutes in coming months to meet demand at those higher prices. Consumers and producers are being sent price signals that will restore a supply and demand balance.
The National Agricultural Statistics Service of USDA has confirmed that the 2012 U.S. corn crop has been severely damaged by drought with a yield estimate of 123.4 bushels per acre and a crop of 10.8 billion bushels. This is the smallest corn crop since 10.5 billion bushels were produced in 2006, but still the country’s eighth largest corn crop. The World Agricultural Outlook Board (WAOB) of USDA projects that U.S. corn exports for the 2012/13 marketing year beginning September 1 could be 1.3 billion bushels, down from 1.55 billion bushels for the current marketing year and 1.84 billion bushels in 2010/11.
In addition to the 1.3 billion bushels of exports, the WAOB projected corn used for ethanol and by-products at 4.5 billion bushels, down from 5.0 billion bushels this year, food, seed and industrial use at 1.35 billion bushels, down from 1.39 billion bushels, and feed and residual at 4.075 billion bushels, down from 4.55 billion bushels this year. The use projections by the WAOB are based on the total supply of corn available and historical price/volume relationships for the major uses of corn. The feed and residual category has a tendency to shrink disproportionately when crops are short and expand when crops are large. While the WAOB projections are a good starting point for anticipating corn trade in 2012/13, market forces will determine the actual trade flows of corn and substitutes.
Corn exports are important to the U.S. market. The projected exports of 1.3 billion bushels for 2012/13 would be 11.6 percent of use compared to 12.4 percent for this year and 14.0 percent for the 2010/11 marketing year. Exports accounted for over 30 percent of use in the late 1970s when the volume of exports peaked at 2.4 billion bushels in the 1979/80 marketing year. That level was not exceeded until 2007/08 when exports were 2.44 billion bushels, but exports were 19.1 percent of use in 2007/08. Use had increased by 67.5 percent from 1979/80 to 2007/08.
Three consecutive years of below trend U.S. corn crops have resulted in a continued decline in the U.S. share of global corn production and trade. The U.S. produced 38.1 percent of the world’s corn production in 2010/11, 35.8 percent in 2011/12 and a projected 32.2 percent in 2012/13, while U.S. exports as a percent of global corn trade have declined from 50.9 percent 2010/11 to 38.9 percent in 2011/12 and 35.6 percent projected in 2012/13. In the late 1970s the U.S. produced about 45 percent of the world’s corn crop, and the U.S. is still near 40 percent in an average growing season. The U.S. share of global trade in corn was 75-80 percent in the late 1970s and almost 63 percent in the record export year of 2007/08.