Grains & Oilseeds Outlook

The 2012/13 outlook for grains and oilseeds is highlighted by acreage gains and prospects for a large increase in supplies driven by favorably high net return prospects ahead of spring planting. Combined 2012 area for wheat, corn, and soybeans is projected to be record high and up 3 percent from 2011 supported by strong new-crop futures prices and a return to more normal spring and summer weather. For wheat, increased area and a return to trend yields support higher production and carryout. Exports are expected to remain flat year-to-year pressured by large world wheat supplies. Corn plantings, at 94 million acres, are projected to be the highest since 1944. A return to trend yields pushes corn production to a new record allowing recoveries in feed and residual use and exports. Falling gasoline consumption and declining ethanol exports limit expected corn use in the production of ethanol. Corn ending stocks are projected to double, pushing cash prices sharply lower by fall harvest. Soybean planted area is expected to match the 75 million acres planted in 2011 as relatively better expected returns for corn keep soybean plantings from increasing. Soybean supplies are projected 8 percent higher with higher beginning stocks and production; however, soybean ending stocks are projected to decline with higher expected crushings and exports. Rice planted acreage is projected to expand 2 percent from flood-reduced 2011 with virtually all of the increase in long-grain in the Delta states. Total rice use is expected 4 percent higher with increased domestic use and exports. Larger supplies of longgrain rice expand projected exports to Western Hemisphere markets. All rice ending stocks are projected 13 percent lower with medium- and short-grain stocks accounting for most of the reduction. The all rice price is expected to strengthen as tighter supplies of medium-grain rice increase its expected price. Futures and cash prices for wheat, corn, and soybeans are all expected to fall in 2012/13 as record U.S. corn production pushes global grain supplies to a new record. Despite the expected decline, prices remain historically high because of strong global demand for grains and oilseeds.