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USDA Projects Record Corn Crop in 2012 - What Does it Mean for Ethanol?

May 10, 2012

           

This morning, USDA released its first estimate of the 2012 corn crop—and it is a big one.  According to today's USDA projections, record U.S. corn production of 14.79 billion bushels is expected in 2012. That's up 19% from last year's crop and is 1.7 billion bushels (13%) larger than the previous record of 13.09 billion bushels in 2009. Based on planting progress and weather to date, USDA is projecting an average yield per acre of 166 bushels, which would also be a new record. Many were expecting big numbers in today's report, but the market likely was caught by surprise at just how big the yield and crop estimates ended up being. On the demand side, USDA is projecting record corn use in 2012/13. The agency expects corn use for feed and residual to jump by about 20% to 5.45 billion bushels. When ethanol feed co-products are added to corn for feed and residual use, the total amount of corn and corn co-products expected to be fed to livestock rises to 7 billion bushels—an all-time record. Meanwhile, exports are expected to increase 12% over last year to 1.9 billion bushels. Food, seed and industrial use (other than ethanol) is expected to grow slightly to 1.43 billion bushels. In fact, at 5 billion bushels, corn use for ethanol and co-products is the only demand category not expected to grow in 2012/13. After all 2012/13 demands are met, USDA expects carry-out stocks to be near 1.9 billion bushels, more than double the projected stocks remaining after 2011/12. While these are just early estimates, it is clear that this year's corn crop is likely to be an all-time record bin-buster. Harvest is still a long way off, and these numbers could change by the fall. But, with normal growing conditions, it appears likely that farmers will continue to amply satisfy all demands for corn. This should put an end to the phony "food vs. fuel" campaign, but we know better—even the most stubborn facts haven't stopped ethanol's critics from continuing to pursue their respective political agendas in the past. The following is some context for this year's likely record crop: At 14.79 billion bushels, the 2012 corn crop would:  Â Â Â Â Â Â Â Â Â Â Â Â  be a record crop by far, beating the 2009 crop of 13.09 billion bushels by 11%.  Â Â Â Â Â Â Â Â Â Â Â Â  be 65% larger than the crop from 10 years ago (8.97 billion bushels in 2002).  Â Â Â Â Â Â Â Â Â Â Â Â  be more than twice as large as the average-sized annual corn crop in the decade of the 1980s (7.15 billion bushels on average). The 2012 projected yield of 166 bushels per acre would:  Â Â Â Â Â Â Â Â Â Â Â Â  be a record yield, beating out the 2009 average yield of 164.7 bushels per acre.  Â Â Â Â Â Â Â Â Â Â Â Â  be only the third time in history yields have topped 160 bu/acre, the others being 2009 (164.7) and 2004 (160.4).  Â Â Â Â Â Â Â Â Â Â Â Â  be 35% higher than the average yield from the 1990s and 12% higher than the average yield since 2000. 2012/13 projected carry-out of 1.88 billion bushels would:  Â Â Â Â Â Â Â Â Â Â Â Â  be more than double the 2011/12 carry-out of 851 billion bushels.  Â Â Â Â Â Â Â Â Â Â Â Â  be the highest level of carry-out in seven years (2005/06 carry-out was 1.97 billion bushels).  Â Â Â Â Â Â Â Â Â Â Â Â  be the fourth-largest carry-out in the last 20 years.  Â Â Â Â Â Â Â Â Â Â Â Â  be 26% larger than the average carry-out since 2000.