(May 10 2012) Exclusive to GEOnomic Investing
The United States Department of Agriculture released its monthly supply-demand report for major crops today, and the corn and cotton reports came as a shock to analysts and sent prices on a downward spiral.
The USDA unexpectedly raised its forecast for near-term corn supplies, and projected a record corn harvest this autumn. Domestic corn inventories as of Aug. 31, the end of the current marketing year, are likely to be 851 million bushels, previously, the agency forecast of 801 million bushels. According to a Dow Jones Newswires poll of analysts, not one analyst expected the USDA would raise its forecast for corn.
U.S. corn production is expected to rise this year to a record of 14.79 billion bushels, from 12.358 billion bushels last year; yields are projected to touch a record of 166 bushels an acre. The USDA added that record foreign corn supplies will also limit the increase in U.S. shipments. Corn for July delivery fell 19.75 cents, or 3.3 percent, to finish at $5.875 per bushel; the contract’s lowest point since Dec. 16 when corn closed the session at $5.83 per bushel.
The USDA expects domestic cotton production for 2012-13 will likely rise 9% compared with the current season, which ends July 31. The USDA predicts global production to decline 5%; however, even with this decline the USDA predicts global supplies at the end of 2012-13 will hit a record for a second consecutive season. Today, July cotton on the ICE Futures U.S. exchange dropped by the 4.00-cent daily limit, or by 4.6 percent, to close at 81.82 cents per lb, cotton’s lowest settlement point in nearly two years, according to data compiled by Thomson Reuters.