Crop markets

USDA first 2012/13 forecast

The USDA has published its first estimates of world supply and demand for the 2012/13 marketing year.  While there are other forecasts published earlier in the year, the USDA estimates provide the baseline for the next 12 months.  Prices are likely to change cautiously to reflect the supply and demand position and changes in production brought about by weather from now on simply modify price from this baseline.  While area planted is an important influence, and these figures reflect the most up to date situation, variation in yield is a bigger factor. 

The Australian forecast was the earliest of those listed above (and before the EU frost and drought were fully realised) and not surprisingly differs most from the other forecasts.  In fact, Australia will be an important influence on production.  The USDA forecast is based on Australian wheat production of 26 Mt against an exceptional 29.5 Mt last harvest and a low in 2006/07 of 10.8 Mt.  There is still 6 months until harvest.

Commentators (such as Rabobank and Goldman Sachs) suggested that the US maize yields used in the USDA forecast are too high, since the increased maize area will be on poorer land and a larger proportion will follow maize and therefore have a lower yield potential.  However, historic data does not show a lower rate of yield increase with increased area.

All US spring plantings were further forward, at the first week of May, than last year when yields were substantially below trend.  The relationship between planting and yield is not strong but there is a suggestion that maize yield rises relative to trend when planting is early.