USDA projects largest US corn planting since 1944

February 27, 2012 |

In Washington, the USDA is forecasting an increase of US corn acreage in 2012, to 94 million acres, the fourth consecutive year of increases, and what would be the largest acreage planted for corn since 1944. At the same time, the USDA said that it expected corn prices to fall to $5 per bushel by year end.

Michael Cox and Mike Ritzelthaler of Piper Jaffray write: ” We question whether 94 million acres will happen. In each of the past two years, the USDA has been overly aggressive in its preliminary corn acreage target, by an average of 450k acres. In a survey conducted by Agriculture.com, 63% of respondents indicated that 94 million acres was too high, and our informal survey of farmers at two U.S. farm shows this year is consistent with that skepticism…higher corn acreage would be positive for seed sales at MON & DD, and crop protection chemical sales at AVD. Projections of a large crop would also be positive for grain handlers and ethanol producers, like BG, ANDE, and GPRE.”

USDA Chief Economist Joe Glauber, in a speech Friday at the annual USDA Agricultural Outlook Forum, said: “The longer run issue for corn-based ethanol is how much ethanol can be absorbed in the domestic gasoline supply—the so-called blend wall….The current penetration rate of ethanol at roughly 10 percent implies a blend wall of about 13.5 billion gallons. Ethanol produced in excess of 13.5 billion must be held as stocks or exported. U.S. ethanol exports hit record levels in 2011. An estimated 909 million gallons of denatured ethanol was exported 2011, about 43 percent going to Brazil. With world sugar prices falling, exports to Brazil will likely fall this year. Because of the expected decline in ethanol exports, corn use for ethanol is expected to fall by 50 million bushels in 2012/13 to 4.95 billion bushels.”

The text of Glauber’s speech is available here.

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Category: Policy

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