The document discusses the impacts of recent USDA reports on grain and livestock markets. The Grain Stocks report showed much higher corn stockpiles than expected, implying lower corn usage for ethanol and feed. This pushed corn prices down and helped hog profits. The Planting Intentions report estimates were close to forecasts except for soybeans, which came in below estimates. The data suggests corn acres may be shifting southward in response to yield declines from consecutive corn crops.

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Vol. 11, No. 61 / April 2, 2013
The impacts of Thursday’s USDA reports were still being USDA GRAIN STOCKS
felt in livestock and grain markets yesterday as the trade grappled March 28, 2013
with many new prospects for the coming crop year. As with all in- Analysts' Estimates*
formation, some impacts were good and some were bad, largely de- USDA, USDA,
pending on one’s point of view. A friend at church on Sunday lamented Units Mar 1, '12 Low High Average Mar 1, '13
that corn prices had fallen sharply and I (Steve) told him it was one of Corn Bil. Bu. 6.023 4.743 5.248 4.995 5.400
the best things to happen to my business and clients in awhile. He un- Soybeans Bil. Bu. 1.374 0.900 1.059 0.948 1.000
derstood but definitely did not appreciate my “contrarian” view. Per- Wheat Bil. Bu. 1.199 1.010 1.249 1.165 1.230
spective is indeed important. *Source: Dow Jones
With the perspective gained through a couple of days of mar- U.S. CORN STOCK REDUCTIONS,
ket observation, let’s consider some more last Thursday’s reports —
and especially those dealing with crops. QUARTERLY
The big mover for grains was the Grains Stocks report that Q1 Q2 Q3 Q4
indicated inventories of corn on March 1 that were sharply higher than 4.5
what was expected by analysts in pre-report surveys. The estimated
4
inventory of 5.4 billion bushels was over 150 million bushels above the
HIGHEST pre-report estimate and over 400 million —or 20% — above 3.5
the average, implying considerably less corn usage since December 1.
3
We know that ethanol usage of corn has been sharply lower but this s
l
e
stock figure implies sharply lower feed use as well — even though meat h
s2.5
u
and poultry production has been higher during that period. A good por- B
n 2
tion of that increase is due to higher cattle weights which have been o
i
l
l
i
driven by the impacts of beta-agonist feed additives which cause very B
1.5
efficient gains late in the animals’ feeding period. But hog and chicken
numbers are larger than last year and we doubt that feedlot efficiency 1
alone can drive that kind of change in corn feed usage. To say the
0.5
least, the grain stocks numbers still mystify us a bit.
To understand the importance of these numbers, consider the 0
implied drawdown of corn stocks in the chart at right. The 2013 number 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
is the smallest since 2003 and is 28% smaller than last year. Note that
the quarters here are relative to the crop year (Q1 is Sep-Nov, etc.). PLANTING INTENTIONS
But livestock producers will not look a gift grain bin in the March 28, 2013
mouth (or door or whatever else you want to put in here)! This report Pre-Report Estimates
has pushed nearby corn futures down nearly $1.00 per bushel in the
past two days and new crop December corn closed at $5.35 yesterday, USDA,
$0.36/bushel lower than on Wednesday of last week. That reduction Crop 2012 Range Average March 2013
has added about $7/head to our hog profit forecast for 2013, a terrific (Million Acres)
change but the projected LOSSES are still about $12/head. New crop
Corn 97.155 96.5 - 98.5 97.339 97.3
futures are now within $0.70 or so of USDA’s forecast 2012-13 season
average corn price of $4.80. With so much risk still ahead for this crop, Soybeans 77.198 77.0 - 80.0 78.351 77.1
it is probably time to start pricing feed needs for 2012-13 — not all feed All Wheat 55.736 55.6 - 57.3 56.320 56.4
of them yet, but some. If the weather is good, $5.50 corn futures will be
corn that feeders buy this year but they may also be the cheapest. tom of the estimate range, adding some fuel to the soybean complex
The much-anticipated report that turned out pretty boring on Thursday afternoon.
Thursday was Prospective Plantings. The numbers came in pretty But the real story may be WHERE THE CORN ACRES are
close to what was expected by analysts. That is especially true for corn located. The tables on page 2 clearly show that Cornbelt producers
and wheat estimates which are both within 100,000 of the average pre- may be tiring of the corn-on-corn yield drag and that we are very de-
report survey estimate. The only thing really noteworthy about the corn pendent on what happens in the South and Mid-South states this year.
figure is that, should it come to pass, it will be the largest area planted And harvest comes early in those areas, so their 1MM additional acres
to corn since 1936. Planned soybean acres did come in near the bot- may be quite important for feed supplies in THIS crop year!
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Vol. 11, No. 61 / April 2, 2013
Planting Intentions -- Corn
Top Twelve Corn States, 2012
2012 2013 Change Pct of '12
(Thousand Acres) (%)
Colorado 1420 1250 -170 88
Illinois 12800 12200 -600 95
Indiana 6250 6100 -150 98
Iowa 14200 14200 0 100
Kansas 4700 4600 -100 98
Michigan 2650 2600 -50 98
Minnesota 8750 9000 250 103
Missouri 3600 3400 -200 94
Nebraska 10000 9900 -100 99
North Dakota 3600 4100 500 114
Ohio 3900 3950 50 101
South Dakota 6150 5900 -250 96
Wisconsin 4350 4350 0 100
Total 84382 83563 -820 99.0
Planting Intentions -- Corn
South and Mid-South States
2012 2013 Change Pct of '12
(Thousand Acres) (%)
Alabama 310 330 20 106
Arkansas 710 1000 290 141
Georgia 345 495 150 143
Kentucky 1650 1600 -50 97
Louisiana 540 600 60 111
Mississippi 820 1050 230 128
North Carolina 860 890 30 103
South Carolina 330 345 15 105
Tennessee 1040 970 -70 93
Texas 1850 2100 250 114
Total 10467 11393 925 108.8