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Rabobank projects 2013 rebound in corn supplies
Story Date: 11/29/2012
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Source: Lisa M. Keefe, MEATINGPLACE, 11/28/12
In its Outlook report on agricultural commodities markets in 2013, Rabobank has good news for processors: More corn and falling corn prices.
Following a price increase in the first quarter — “to encourage further demand rationing in the U.S.” — Rabobank expects corn prices to fall 24 percent over the course of calendar 2013, to an average $6 a bushel by the fourth quarter.
That means that in the first quarter, prices will rise to $7.90 a bushel, Rabobank projects, and that “the transition from Q2 to Q3 will likely be the most volatile period of 2013 as the US corn complex transitions from a strong deficit to a moderate surplus.”
To achieve this, Rabobank expects U.S. corn production of 14.1 billion bushels, an increase of 35 percent from the drought-induced low of 2012-2013. Furthermore, “We project that a record 97.6 million acres will be planted in the U.S., further displacing soybeans as CBOT Corn prices are forecast to outperform CBOT Soybeans ahead of US planting decisions in Q1 2013.”
On a global scale, Rabobank projects record corn production in South America, contributing to lower prices, while increased corn imports by China will put upward pressure on prices.
Bottom line, though, is that the livestock industry has to continue to seek a suitable replacement for corn as a feedstock, Rabobank analysts say: “Corn stocks in the U.S. are likely to be minimal by 31 August 2013 as we believe the USDA continues to overstate U.S. production, with feed demand running at an unsustainable pace.
Demand for U.S. corn has slowed, particularly from the ethanol sector and for export, but the pace of feed use is too high in view of current supply constraints. … Our calculations suggest that U.S. domestic consumption, absent significant imports, must decline 11 percent year-over-year in 2012/13 — well above current indicators of a 5 percent to 6 percent reduction year-over-year.”
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