The biggest surprise was in corn. First, the department unexpectedly raised its estimate of 2011 corn production by 48 million bus, to 12,358 million bus. The higher production estimate was attributed to a larger harvested area and stronger yields than earlier estimated. The production estimate was particularly surprising in view of the fact the U.S.D.A. steadily reduced its estimate of the U.S. corn crop since the August Crop Production report, and the trade expected yet another decrease.
Because of the larger corn crop estimate and indications corn feeding in September-November was below expectations, the U.S.D.A. estimated Dec. 1 stocks of corn at 9.64 billion bus, which, while down 4% from a year earlier, were about 240 million bus larger than trade expectations.
Before last week’s drop, corn futures prices rallied about 80c a bu in the past couple of months largely on concerns about dryness in South America (the U.S.D.A. lowered its forecast for Argentina’s corn crop by 3 million tonnes, to 26 million tonnes). But the larger U.S. supply tempered concerns U.S. and world stocks would fall uncomfortably low before the next U.S. harvest. The U.S.D.A. forecast the U.S. carryover of corn on Sept. 1, 2012, at 846 million bus, down just 2 million bus from the December projection, down 25% from 1,128 million bus in 2011 but up more than 90 million bus from the average trade forecasts.
The U.S.D.A. forecast the carryover of wheat on June 1, 2012, at 870 million bus, down 8 million bus from the December projection, up 8 million bus from 2011 and compared with the average of pre-report trade forecasts at around 830 million bus. The U.S.D.A. forecast the carryover of soybeans on Sept. 1, 2012, at 275 million bus, up 45 million bus from the December projection, up 60 million bus from 2011 and compared with the average of pre-report trade forecasts at around 227 million bus.