Fundamentally Speaking

Joel Karlin
DTN Contributing Analyst

The USDA left the trade with more questions than answers after the April supply-demand report was released.

There was quite a bit of interest in their 2012-13 U.S. corn/feed residual number that was lowered by 150 million bushels to 4.40 billion bushels.

In light of the surprise March 1 corn stocks estimate that came in around 400 million bushels above trade expectations, there were ideas that the feed number perhaps would be lowered even more.

The question then is whether feed demand is this large and the higher than expected stocks figure will be corrected when the next set of figures are released June 28.

Alternatively, perhaps there will be no resolution on this issue until September when it may be revealed that the 2012 U.S. corn crop is higher than the 10.780 billion bushels figure the USDA has been using.

Of course, down the road, the USDA may choose to lower the feed number even more but will do so in incremental steps and the accompanying graphic suggests this may be the case.

This chart shows the change in the USDA U.S. corn feed demand projection from the March to the April report and then from the April report to the final one issued for that marketing year in November.

Very often changes in feed utilization from March to April are linked to the March 1 stocks report, as is the case this year.

The fact is that for the past six years in a row, eight of the 10, the USDA has lowered projected feed demand from the April to the final WASDE report, and that includes years then the estimate declined from the March figure and increased.

With record high corn prices, lower animal numbers, and scrimped to negative margins for most sectors we suspect that this pattern of a lower feed usage figure than seen in April will continue.

(KA)

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