Corn supply hit its lowest in eight years as the USDA reported in the Grain Stocks Report and Small Grains Summary Report , signaling stronger demand for the grain. So, Corn prices surged the most in three months.
Corn Stocks Down 12 Percent from September 2011
Old crop corn stocks in all positions on September 1, 2012 totaled 988 million bushels, down 12 percent from September 1, 2011. Of the total stocks, 314 million bushels are stored on farms, down slightly from a year earlier. Off-farm stocks, at 675 million bushels, are down 17 percent from a year ago. The June – August 2012 indicated disappearance is 2.16 billion bushels, compared with 2.54 billion bushels during the same period last year.
“With corn inventories less than a billion bushels and wheat and sorghum stocks also shrinking, the grain trade is looking at a very tight supply situation,” said Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis. “This report signals that demand has not slowed, shifting the focus to the smaller harvest expected this year.”
“A sub-1 billion number is enough to get the market nervous,” said Sterling Smith, futures specialist for Citigroup in Chicago, referring to corn. Smith said the surge in corn prices pulled up wheat and soybean prices too.
Corn Price Rally
The price of corn surged 5.6 percent Friday after the USDA news. Corn for December delivery rose by the 40-cent limit on the Chicago Board of Trade to end at US$7.5625 per bushel. The grain rose 19 percent for the third quarter ending Friday.
The ending-stock figures showed that record-high corn prices during the quarter had failed to put as big a dent in demand as analysts expected, suggesting that corn prices may need to rise higher still in the coming months to ration demand amid heightened competition for food, livestock feed and ethanol.
While consumers have been bracing for higher prices after the worst U.S. drought in half a century withered corn and soybean crops this summer, Friday’s data shows the margin of error in supplies is even thinner than many feared.
Jason Kitt of The Linn Group said livestock producers who predominantly use corn in feed rations are increasingly turning to wheat. The number “implies pretty good wheat feeding during the quarter, which is supportive — wheat is corn again,” Kitt said.
- Corn Futures Jump Most Since June on Unexpected U.S. Supply Drop – Bloomberg
- Corn prices grow as supplies drop to 8-year low – The China Post
- Corn supply drops, prices soar – JournalStar.com
- Corn futures up daily limit on shrinking supply – Pork Network