Corn price rise hits South African feed market

South Africa’s feed manufacturers and animal protein producers face higher ingredient costs. FAO’s latest food price trends bulletin reports that May 2015 prices for yellow maize in South Africa were 17 percent higher than a year earlier.
The corn price has been driven up by the anticipation of sharply reduced 2015 production, which is forecast to be down by 30 percent from last year’s bumper crop.
However, despite the unfavorable production prospects, substantial stock levels of more than 2 million tonnes and low international prices limited larger price gains.
The increase in maize prices in South Africa is expected to continue to exert inflationary pressure on the importing countries of the subregion, namely Botswana, Lesotho, Namibia and Swaziland, which are also forecasting reduced harvests this year.

USDA WASDE report shows strong pace of corn, soybean exports

In the September World Agricultural Supply and Demand Estimates (WASDE) report, the U.S. Department of Agriculture (USDA) forecast 2013-14 marketing year exports at 1.225 billion bushels for corn and 1.37 billion bushels for soybeans, said University of Illinois agricultural economist, Darrel Good.
"The strong pace of exports and especially export sales so far this year has created expectations of larger forecasts in the WASDE report to be released on November 8," said Good.
As of October 31, the USDA reported that cumulative corn export inspections for the marketing year beginning September 1 totaled 206.7 million bushels. Cumulative inspections were 30 percent larger than the previous marketing year and represented 17 percent of the current USDA projection for the year, he said.
Cumulative export commitments (exports plus unshipped export sales) as of October 24 were reported at 808 million bushels. Those commitments were 88 percent larger than commitments of the previous marketing year and represented 66 percent of the USDA projection for the year.
"Compared to commitments of a year ago, commitments this year are 138 million bushels larger for China, 125 million larger for Mexico, and 88 million bushels larger for unknown destinations.  Sales to China represent nearly 22 percent of the total sales, compared to only 8 percent last year," Good said.
As of October 31, the USDA reported that cumulative soybean export inspections for the marketing year that began on September 1 totaled 338.5 million bushels. Cumulative inspections were 9 percent smaller than those of the previous year and represented 25 percent of the current USDA projection for the year, he said.
Cumulative export commitments as of October 24, however, were reported at 1.184 billion bushels. Those commitments were 25 percent larger than commitments of a year earlier and represented 86 percent of the USDA projection for the year, according to Good.
"Compared to commitments of a year ago, commitments this year are 160 million bushels larger for China and 51 million larger for unknown destinations. About 14 million bushels have been sold to Russia, compared to none last year. Sales to China represent 62 percent of the total sales compared to 61 percent last year," Good noted.
Export sales of corn and soybeans have been quite large early in the marketing year, but Good says the question is: "Is early-year export activity a good predictor of total marketing year exports? The short answer is no," he said.
According to Good: "Seasonal export shipment and sales patterns vary considerably from year to year. Over the 10 years from 2003-04 through 2012-13, for example, corn exports during the first quarter of the marketing year averaged 26 percent of the total for the year but ranged from 22 to 30 percent.  The pattern of sales was even more varied. Cumulative export sales at the end of the first quarter of the marketing year averaged 49 percent of the total exports for the marketing year but ranged from 36 to 66 percent."
Good said that soybean exports during the first quarter of the marketing year averaged 36 percent of the total for the year but varied from 28 to 47 percent. As with corn, the pattern of sales was even more varied. Cumulative export sales at the end of the first quarter of the marketing year averaged 63 percent of the total exports for the marketing year, but ranged from 48 to 82 percent.
"While the magnitude of export sales early in the marketing year is not generally a good predictor of marketing-year exports, cumulative sales so far this year are still unusually large relative to the USDA's September export forecast for the year," he said.
As mentioned before, after the eighth week of the marketing year, corn sales equal 66 percent of the USDA projection. That equals the largest percentage experienced after the thirteenth week of the marketing year in the previous 10 years. Similarly, soybean sales at the end of the eighth week represent 86 percent of the USDA projection for the year. That exceeds the largest percentage experienced after the thirteenth week of the marketing year in the previous 10 years, he said.
"With a very large corn crop, U.S. corn exports may well exceed the current projection of 1.225 billion bushels. Larger exports would in turn result in smaller year-ending stocks than would otherwise occur but would probably not result in higher corn prices. Instead, large exports are likely dependent on corn prices remaining relatively low," Good said.
According to Good, if soybean exports are to exceed the current projection of 1.37 billion bushels, the U.S. crop may have to exceed the current forecast of 3.149 billion bushels because year-ending stocks are already projected to be small.
"As a result, there is some chance that soybean prices will have to remain high enough to limit consumption in the face of strong export demand. The size of the USDA's November 8 crop forecast will determine to a large extent whether or not such rationing is required," he said. 

Corn replacing feed wheat in East Asia

Black Sea origin corn is selling at a discount of $23 per metric ton to feed wheat in East Asia, prompting buyers to substitute wheat with corn, according to trading executives and feedmillers.
The upcoming corn harvest in Brazil, the recently completed corn plantings in the U.S. and rising corn production in Ukraine are all expected to push up global corn production to a record high and drag down prices, they said.
South Korea's largest animal feed miller, Nonghyup Feed Inc. (Nofi), on June 18 got the lowest offer in a tender to import 55,000 metric tons of optional origin feed wheat at around $282/metric ton, basis cost and freight but cancelled the tender citing cheaper availability of corn. The lowest offer for feed wheat was made by Noble Resources at around $282/metric ton, basis cost and freight but Nofi rejected the offer.
Nofi instead bought two cargoes totaling 127,000 metric tons of optional origin corn. It bought a 69,000-metric-ton cargo of South American or U.S. corn for arrival by Oct. 30 at a premium basis over the December futures contract on the Chicago Board of Trade, which at current price levels works out to be around $274.50/metric ton, C&F.
For arrival by Nov. 15, Nofi bought an even cheaper cargo at $259.23/metric ton, C&F, likely to be supplied from the Black Sea region by Swiss commodities trading company Agrifert SA. It is the cheapest corn purchase price for any South Korean company in more than a year. Nofi is buying Black Sea origin corn for the first time.
"By November Ukraine's next Black Sea region harvest will be ready for delivery and many millers are planning to reduce feed wheat use by replacing with corn," said an animal feedmiller in Seoul.
Corn output is expected to rebound by 10 percent to 963 million metric tons in 2013-2014, according to G-20's Agricultural Market Information System.

Brazil corn production forecast up on heavy rains

Brazil's corn production estimate has gone up almost 2 percent following heavy April rains in key production areas, according to crop forecaster Lanworth. The expectation for the 2012–2013 corn harvest is now 78.5 million metric tons, up from the previous estimate of 77.1 million metric tons.
"April precipitation exceeded normal by 20 percent to 30 percent in core production districts of Mato Grosso and Mato Grosso do Sul, maintaining near normal soil moisture as the dry season began," said Lanworth in a report.
Wheat production was forecast down in both Australia and Ukraine due to dry conditions. 2013–2014 wheat production in Australia has dropped to 24.3 million metric tons from 25 million metric tons, while Ukraine is now at 21.9 million metric tons from 23.3 million metric tons, according to Lanworth.

Strong Brazil crop anchors increased global corn production

Global corn production estimates for 2012-13 are raised 2.1 million tons, largely based off of the strength of the Brazilian crop, whose production is raised 1.5 million tons. Those figures were released February 8 in the United States Department of Agriculture’s World Agricultural Supply and Demands Estimates report.
Higher acreages planted and stronger yields for the first-season crop and good early-season prospects for second-season corn are credited for the hike in Brazilian production.
The 1.5 million ton climb puts Brazil near its record increased levels it set a year ago, said USDA chief economist Joe Glauber. If the projections hold true, Glauber said Brazil could become the world leader in corn exports.
“They’ve really become a major corn producer. That’s the first time — in our records at least — that another country has become the top exporter in the world,” said Glauber.
Adding to the overall world corn production increase are a 0.8 million ton increase in Mexico, 0.6 million ton hike in India, and an increase of 0.4 million tons in the Ukraine. Those gains more than offset the drop in Argentinian production, which has been lowered by 1 million tons. Glauber explained that the country has been experiencing dry conditions, but its corn production was still 29 percent above its crop from the prior year, which was also hammered by drought.
The increase in foreign corn production signals a projected 50 million bushel decrease in US corn exports. Slow sales and shipments are adding to those lower corn export figures.
The projected corn ending stocks are raised 30 million bushels. Pressure remains on the feed markets, as U.S. corn use for ethanol production was unchanged and corn use for sweeteners and starch is raised 20 million bushels.
To view the full report click here. 

Environmental Protection Agency denies ethanol waiver requests

The Environmental Protection Agency has denied requests from some U.S. state governors and associations for a waiver of the current production requirements for corn-based ethanol, according to reports.
Sources that requested the waiver said the 2012 U.S. drought made the Renewable Fuel Standard untenable. "The worst drought in half a century has made a bad situation worse," said National Chicken Council President Mike Brown in October. "Record high and extremely volatile grain prices have been the norm since the introduction of the Renewable Fuel Standard and have greatly impacted our cost of production, severely harming our economic well-being."
The National Corn Growers Association has said that it supports the Environmental Protection Agency’s decision to deny the Renewable Fuel Standard waiver request. "We believe Administrator [Lisa P.] Jackson appropriately recognized petitioners did not properly prove severe nationwide economic harm had occurred thereby creating no justification for a waiver of the RFS," said association President Pam Johnson. “The ethanol industry plays a pivotal role in job creation throughout the country, supporting over 400,000 jobs nationwide. This includes many in ethanol plants in rural America. The RFS advances the use of domestically produced renewable fuels, encourages new technologies and enhances U.S. energy independence.”
A coalition of livestock, poultry and dairy organizations, however, expressed disappointment with the decision. “We are extremely frustrated and discouraged that the EPA chose to ignore the clear economic argument from tens of thousands of family farmers and livestock and poultry producers that the food-to-fuel policy is causing and will cause severe harm to regions in which those farmers and producers operate,” said the coalition. “How many more jobs and family farms have to be lost before we change this misguided policy and create a level playing field on the free market for the end users of corn? It is now abundantly clear that this law is broken, and we will explore remedies to fix it.”
The American Feed Industry Association has also called for further action in the wake of the Environmental Protection Agency's denial of the waiver. “AFIA will call on Congress and the Administration to not let this issue be ignored," said President and CEO Joel G. Newman. "Congress must pass and implement an RFS temporary trigger mechanism based on the USDA-calculated corn stocks-to-use ratio. This solution is recommended in H.R. 3097, the Renewable Fuel Standard Flexibility Act, introduced by Reps. Bob Goodlatte (R, Va.) and Jim Costa (D, Calif.) with bipartisan support from more than 30 members of the House."

India corn exports to drop 37 percent in 2012–2013

India's corn exports are predicted to fall 37.5 percent in the 2012–2013 marketing year due to decreased production and weak global prices, according to a U.S. Department of Agriculture report.
The country exported an estimated record 4.8 million metric tons of corn in the 2011–2012 marketing year, while only 3 million metric tons are expected for 2012–2013. Prices on the domestic market were strong in July due to drought and the anticipation of strong exports, but have been slow since September, said the USDA report. They are currently at Rs 11,800 to Rs 14,000 (US$219–260) per metric ton.
According to the USDA, domestic prices are likely to drop even further as new crop arrival accelerates, which would move numbers below the Indian government's minimum support price of Rs 11,750 (US$218) per metric ton. In addition, due to a poor monsoon season, India's corn production is estimated to drop from 2011–2012's 21.57 million metric tons to 20 million metric tons, said the USDA.

Spain reduces 2012 corn crop forecast

Spain's corn crop is predicted to reach 4.24 million metric tons in 2012, up 2.3 percent from 2011's 4.15 million metric tons but down from the Agriculture Ministry's previous outlook of 4.29 million metric tons.
Spain had its second-driest summer in 60 years, according to the ministry’s weather service. The period from June through August was the fourth-warmest since 1961.

Global corn crop to drop further on low EU production

Global corn production is now expected to be at 833 million metric tons for the 2012–2013 harvest year, down from August's prediction of 838 million metric tons and 2011–2012's 875 million metric tons, according to the International Grains Council. The latest drop comes from a drop in the EU's corn production, now expected to come in at 55 million metric tons compared to an August prediction of 59.9 million metric tons.
Hot and dry weather damaged Europe crops even more than estimated, shrinking an already reduced global harvest from its July forecast of a record 917 million metric tons. This added to the worst U.S. drought in over 50 years, which has caused corn prices to rise 49 percent since mid-June on the Chicago Board of Trade, reaching a record $8.49 per bushel on August 10. “Demand is likely to fall given tight supplies and high prices, with both feed and industrial use expected to decline,” said the International Grains Council.
World wheat output was also revised down, at 657 million metric tons from 662 million metric tons in August, as dry weather harmed crops in the Black Sea region. Farmers harvested a record 696 million metric tons in 2011. In contrast, global production of soybeans could reach 256 million metric tons in the 2012–2013 season, up 8 percent from 2011–2012.

South Africa corn crop forecast up 2.7 percent

South Africa has raised its corn crop forecast by 2.7 percent to 11.5 million metric tons for the current crop year, according to the Crop Estimates Committee, up from the August 28 prediction of 11.2 million metric tons. The country produced 10.4 million metric tons of corn in the 2011 year.
“The increase is because physical deliveries to silos in the season were better than anticipated,” said a spokeswoman for the committee. “We had a mid-season drought, but deliveries were higher in the end.” The forecast includes 6.51 million metric tons of white corn and 4.99 million metric tons of yellow corn. White corn for December delivery fell 3.3 percent to 2,237 rand (US$272) per ton on September 26 in Johannesburg. Yellow corn for delivery in the same month dropped 2.6 percent to 2,247 rand.

World Bank: Global corn, soybean prices at all-time highs

Corn and soybean prices are at all-time highs globally, according to a recent World Bank report, causing global food prices to increase by 10 percent and creating severe budget challenges in the Middle East and Africa.
The World Bank said the ongoing drought and dry summers in the U.S., Russia and India are the major cause, resulting in $300-per-metric-ton corn — twice the price of 2010. Soybeans have doubled to more than $600 per metric ton in five years. The World Bank's report is similar to that of the United Nations’ Food and Agriculture Organization, which said in August that rising grain, corn and sugar prices drove up its food price index by 6 percent. 

Global corn harvest estimate drops due to US drought

Global corn production is estimated to fall 0.7 percent on the damage done to crops by the U.S. drought, according to the International Grains Council. The harvest will now be 863.5 million metric tons of corn in the 2012–2013 crop year, 53.7 million metric tons less than forecast on July 2. The 2011–2012 crop was 869.9 million metric tons.
Corn futures have gone up 55 percent on the Chicago Board of Trade since mid-June between the drought in the U.S. and Ukraine. Increasing grain costs will lift food prices globally in July, according to the United Nations’ Food & Agriculture Organization. “Severe drought in the U.S. has lowered expectations for a replenished supply this fall and driven commodity futures prices to record levels,” said Alberto Weisser, the CEO of commodity trader Bunge Ltd. “Large crops next spring from farmers in South America will help provide relief to a stressed market.”
The International Grains Council cut its outlook for grain exports by the U.S., Russia, Ukraine and Kazakhstan, and increased forecasts for shipments from Brazil, Canada, Australia and the European Union.

Global coarse grain production up for 2012-2013

Global coarse grain production in 2012–2013 has been projected up 3.6 million tons in June to 1.23 billion tons, mostly based on increased area prospects in some countries, according to the U.S. Department of Agriculture's latest international outlook. World corn production has been increased 4.2 million tons to 949.9 million tons, but barley has been cut 0.7 million tons to 134.7 million tons.
The 2012–2013 corn area forecast for China has been raised 300,000 hectares to 34.3 million hectares as net returns per hectare for corn continue to be more favorable compared with soybeans (soybean area is also forecast lower by 300,000 hectares). This 2 million-ton increase brings China’s total corn production in 2012–2013 to a record 195 million tons, according to the USDA.
EU 2012–2013 corn production has been increased 1.1 million tons in June to 64.2 million tons, based mostly on increased area reported for Hungary and Poland. Dryness and cold winter temperatures hurt some winter rapeseed and wheat, causing winter-kill that has increased area sown to spring-planted crops. EU barley prospects are nearly the same as predicted in May as a significant area-based increase for Germany, and smaller increases for Poland, Hungary and Italy have been offset by a significant reduction for Spain and a small decline for Bulgaria, countries where reduced area and yield are confirmed by preliminary harvest reports.
Russia’s corn production has been raised 0.8 million tons to a record 7.8 million as planting reports indicate producers have sown more than 100 percent of planting intentions. The 2011–2012 corn crop was profitable compared to most other crops, and this year, area is forecast up 23 percent. Russia’s barley area has also been raised, but winter barley yields have come in below expectations, offsetting the area increase. Sowing progress reports from Belarus indicate a sharp increase in corn plantings, boosting production prospects 0.3 million tons to a record 1.3 million. 

World corn crop may hit new record

Nearly 15 billion bushels of corn are expected for the U.S. 2012–2013 harvest year.

Encouraging signs regarding the supply of feed grains on the world market over the next 12 months have been reported to the 2012 annual conference of the International Grains Council by Dr. Joseph Glauber, chief economist at the U.S. Department of Agriculture.
A further increase in the global corn harvest is expected for 2012 after the record crop of 2011, according to Glauber. (Watch video of Glauber reporting on the global animal feed grains market.) Current indications are that the 2012 crop will be higher by almost 9 percent, boosted by a near-20 percent rise in the quantity harvested in the U.S.
Although an update will be issued at the end of June, it seems currently that U.S. growers have planted about 96.37 million acres of corn, the largest area since 1937. Record corn yields are also being projected. USDA analysts estimate that the increase of over 4 percent in planted area will combine with rises of 6 percent for harvested area and almost 13 percent for yield to give a production of 14.8 billion bushels of corn in the 2012–2013 harvest year compared with 12.4 billion bushels in 2011–2012.
According to Glauber, the other key driver to a re-building of grain stocks is likely to be that U.S.-based ethanol plants will use no more corn in 2012–2013 than in the year before. It would mark the third consecutive year of flat demand from biofuel producers, whose ethanol production capacity has stayed the same since 2008 after previously showing sharp annual increases.
Their market potential has dropped following the big increase in energy prices seen in 2007–2008. Back in 2007 the car-fuel consumption on the American market of 2013 was projected at 150 billion U.S. gallons. With people reacting to higher prices by driving less and by choosing more energy-efficient cars, however, the 2013 volume has been cut to below 135 billion gallons.

Global corn crop forecast raised to 932 million tons

Global corn production will reach 932.11 million metric tons in the year starting July 1, according to Informa Economics Inc.
In April, Informa forecast output at 918.599 million tons, up from an estimated 868.017 million harvested in the current year.

South Africa corn prices may hit $340 in 2013

South African corn prices may reach 2,646 rand (US$340) per ton in 2013, according to the agribusiness unit of bank Absa Group Ltd.
Prices of agricultural land in the country are forecast to grow by 12 percent per year, said Ernst Janovsky, general manager of the agribusiness unit. White corn for July delivery declined 3.1 percent to 2,104 rand (US$270.78) at the April 17 midday close in Johannesburg. Yellow corn for July delivery was also down 3.1 percent at 2,045 rand (US$263.19).

Philippines January corn stocks down from December 2011

The Philippines' corn stocks for January were down 6.2 percent from December 2011 numbers, to 166,100 metric tons as opposed to 177,100 metric tons, according to the country's latest reports. Of the January stocks, 104,200 metric tons were commercial and 61,700 metric tons were household. The country's rice stocks were also down, by 15.2 percent, according to the reports. January stocks came in at 2.62 million metric tons compared to December 2011's 3.1 million metric tons. Of the January stocks, 600,000 metric tons were commercial and 980,000 metric tons were household; 1.04 million metric tons were National Food Authority stocks.

South Africa corn stocks fall 45 percent December 2011

South Africa's corn stockpiles fell 45 percent, to 3.33 million metric tons, in December 2011, according to the South African Grain Information Service.
The country had 2.24 million metric tons of white corn and 1.09 million metric tons of yellow corn in stock, according to the agency. Barley, canola, oat, soybean and sunflower seed stocks were up compared to 2010 numbers, while groundnut and sorghum were down. Wheat stocks rose 35 percent, to 1.8 million metric tons.

South America drought causes irreversible damage to corn crops

Brazil and Argentina are expected to lose 11 million metric tons of corn output due to a drought that has caused irreversible damage to South America's corn crop, according to forecaster Agroconsult.
Estimates in December 2011 had Argentina's harvest at 27 million metric tons of corn; now, Agroconsult puts the number at 20 million metric tons. Brazil's harvest has been cut to 61 million metric tons from 65 million metric tons. South America's soybean output will also be harmed by the drought, according to Agroconsult. Soybean production in Argentina has been cut to 49 million metric tons from 53.5 million metric tons, while Brazil's has been reduced to 73.5 million metric tons from the 75.2 million metric tons estimated in December 2011. Brazil is the third-largest producer of corn in the world after the U.S. and China. Argentina is the second-largest exporter of corn in the world after the U.S.

Philippine feed millers request duty-free corn imports

The Philippine Association of Feed Millers Inc. is requesting a duty-free import of 100,000 metric tons of yellow corn for the first quarter of 2012 as a result of increased corn prices due to typhoons Pedring and Quiel, according to reports.
The planned import is only 13% of the total requirement estimated for the first quarter, and will not adversely affect the demand or price of local corn, said PAFMI President Norman C. Ramos. The Pork Producers Federation of the Philippines Inc. has also requested a permit to import corn at zero tariff due to the increase in corn prices. The volume of corn crops damaged by typhoons Pedring and Quiel are estimated to have reached 45,000 metric tons, or about 2.93% of the corn production target of 1.551 million metric tons for the fourth quarter of 2011.
Agriculture Assistant Secretary Edilberto M de Luna said the Department of Agriculture is looking into the requests.