US corn inventories will rebound from one of their lowest
levels on record to one of the highest in 2013-14, as the harvest hits a
record, but "strong foreign competition" limits exports.
The US Department of Agriculture - in its first detailed
forecasts for the domestic corn balance sheet in the forthcoming season -
revealed it had factored a yield of 163.6 bushels per acre into its estimate
revealed on Thursday of a record 14.35bn-bushel crop this year.
"Fall and winter dryness have little correlation with
conditions during the following growing season and eventual yield outcomes,"
the USDA said, referring to, in some areas, the persistence of the 2012 drought
which sent the yield to a 16-year low of 123.4 bushels per acre.
But use of the grain will not grow as strongly, enabling a recovery
to 2.177bn bushels (55.3m tonnes) in stocks at the close of 2013-14, in August
next year – more than three times the level at which they are expected to end
Inventories at that level would represent the highest in 26
years – since the end of a late-1980s build in inventories which drove Chicago corn
prices below $1.50 a bushel, a low not reached since.
USDA chief economist Joseph Glauber on Thursday forecast a
sharp drop in prices in 2013-14, of one-third to $4.80 a bushel.
Consumption of corn by livestock and poultry farms will show
a healthy rebound, of 21% to a six-year high of 5.4bn bushels, with "lower feed
costs expected to provide an economic incentive for increased feed use", the
However, the recovery in corn use in making ethanol will be
limited by falling gasoline use, a reflection of greater vehicle efficiency,
lower mileage and weak economist recovery.
The rebound in use in other processing purposes will also be
constrained, with the market for corn-based sweeteners coming under pressure
from lower exports to Mexico, "as sugar output there increases".
And US exports will, at 1.50bn bushels (38.1m tonnes),
remain at historically low levels, as competition from growing rival forces in
corn, such as Brazil and Ukraine, "tempers the rebound".
"Substantial foreign competition keeps exports at their
second lowest level since 1993-94 as the US share of world corn trade struggles
to recover," the USDA said.
"Brazil has emerged as a formidable competitor" in export
markets, if one tainted somewhat by logistical hiccups.
"Both Argentina and Ukraine are expected to produce and export
substantial volumes once again, remaining strong competitors."
The comments follow Brazil's emergence as the top corn
exporter, one some accounting methods, although this is also a reflection of
the depth of the decline in US output last year.
Brazil's production has swollen through increased sowings of
so-called safrinha corn, planted as a follow-on crop to soybeans.
Ukraine has also emerged as a force in corn, helped by
improved seed, and a quest by farmers to avoid the risks associated with autumn-sown
crops in a country with cold winters.