There were few surprises from the U.S. Department of Agriculture’s 2012 Agricultural Outlook Forum last week, including an “as expected” but still huge forecast for a record large 2012 U.S. corn crop of 14,270 million bus. Forecasts for soybean and wheat planted area and production were adjusted upward.
It was the corn numbers the trade was anticipating. The U.S.D.A.’s projection of 94 million planted acres in 2012, the highest since 1944 and up about 2 million acres from 2011, was unchanged from its prior baseline forecast. Harvested area was projected at 87 million acres, up about 3 million acres from 84 million acres last year. Also unchanged but likely the most controversial number was the U.S.D.A.’s projected average 2012 U.S. corn yield of 164 bus an acre, also unchanged from its initial forecast but up 11% from 147.2 bus an acre in 2011 and second only to 164.7 bus an acre in 2009.

One trader suggested that after a couple years of poor corn yields, especially in 2011 when the final yield dropped 7% from the initial projection, the “odds favor” a rebound in average yield in 2012.
The U.S.D.A. forecast the price of corn paid to farmers to average $5 a bu in 2012-13, well below the $5.80@6.60 for 2011-12 as the projection in its February World Agricultural Supply and Demand Estimates and comparable to $5.18 a bu in 2010-11. Corn carryover on Sept. 1, 2013, was forecast at 1,616 million bus, more than double the projected carryover of 801 million bus for this year. The larger supply and lower corn price may have a far-reaching effect on the production and price of other grains, especially soybeans and wheat.

U.S. soybean planted area in 2012 was forecast at 75 million acres, up 1 million acres from the U.S.D.A.’s earlier baseline forecast but about the same as in 2011. Harvested area in 2012 was forecast at 74.1 million acres, up about 500,000 acres from 2011. Average yield was forecast at 43.9 bus an acre, up 2.4 bus from 2011. U.S. soybean production in 2012 was forecast at 3,250 million bus, up 35 million bus from the earlier baseline forecast and up 194 million bus, or 6%, from 2011. The average price paid to farmers was forecast at $11.50 a bu, down 20c from the midpoint of the 2011 forecast range. U.S. soybean carryover on Sept. 1, 2013, was forecast at 205 million bus, down 70 million bus from the latest 2012 projection.