Vol. 11, No. 66 / April 9, 2013

Following a grain stocks report that was significantly different that what trade was expecting, USDA will update to-morrow, April 10, its grain and meat protein balance sheets. A poll of market analysts conducted by Down Jones indi-cated that on average analysts expect USDA to revise higher its estimates of corn ending stocks for the 2012/13 marketing year. The March 1 quarterly stocks survey pegged March 1 corn stocks at 5.4 billion bushels, almost 400 million bushels larger than what trade was expecting coming into the report. With the sup-ply side of the balance sheet known (see table), it will be interest-ing to see how USDA will change its estimates of corn exports, ethanol use and feed use for the current marketing year. Given the average of trade estimates per Dow Jones at 824 million bushels, the stocks/use ratio jumps to 7.4% compared to 5.6% in the March report.

How could the three main demand categories be impact-ed in the April update? Export numbers were lowered signifi-cantly in the March report, projected to be down 46.5% from a year ago. Little has changed in corn export volume in recent weeks but it is likely that the lower prices will increase the quan-tity demanded in world markets. US corn was trading at a signif-icant spread to Argentinean corn in the second half of 2012 and early 2013. The spread has for the most part disappeared. Com-bined Argentina and Brazil corn exports in 2012/13 are currently projected to be 38 million MT, compared to a little over 20 million MT out of the US. The main challenge for South America at this point is transportation, with wire stories this week noting Brazil may import Argentine corn to its Northeast areas even as other parts of the country have ample supplies. The evolving situation in China with bird flu continues to be a concern in the overall picture of global feed demand, with trade keeping a close eye on the possibility that a full blown epidemic could lead to significant culling, a net reduction in feed demand and longer term impact on chicken and pork demand in one of the fastest growing mar-kets for meat protein in the planet. The February corn export numbers down 58% from a year ago and chances are USDA may lower the final corn export number to 800 million bushels.

Ethanol demand will likely be left unchanged. Eth-anol production has increased in recent weeks following lower corn prices and improving margins. Daily ethanol output which was running about 15% below year ago levels in January and February now is down 8% from last year. USDA will likely want to see a few more weeks of increasing ethanol output before mak-ing any meaningful changes to the ethanol demand part of the balance sheet. Other industrial use numbers may be changed at

the margin but chances are USDA will leave food, seed and other use unchanged.

Even if corn exports are revised modestly lower, the bal-ance sheet implies that the feed and residual numbers will likely be revised lower. If the trade estimate of 824 million bushels is correct, and considering our discussion of exports and ethanol above, feed and residual for 2012/13 may be lowered by about 170 million bushels to about 4.380 billion bushels. This would represent a feed/residual decline of 3.7% from the previous marketing year. The March 1 grain stocks numbers implied that in the first half of the marketing year feed use was down about 6%. While there are fewer cattle on feed, the hog and poultry numbers are larger than a year ago and they are increasing. Broiler egg sets up 1.1% from a year ago. Feed use rationing was all the talk after the March 1 WASDE report. A month later, it looks like the job will be a little easier.

Sponsored by

The Daily Livestock Report is published by Steve Meyer & Len Steiner, Inc., Adel, IA and Merrimack, NH. To subscribe, support or unsubscribe visit www.dailylivestockreport.com. Copyright © 2013 Steve Meyer and Len Steiner, Inc. All rights reserved.

The Daily Livestock Report is not owned, controlled, endorsed or sold by CME Group Inc. or its affiliates and CME Group Inc. and its affiliates disclaim any and all responsibility for the informa on contained herein. CME Group®, CME® and the Globe logo are trademarks of Chicago Mercan le Exchange, Inc.

Disclaimer: The Daily Livestock Report is intended solely for informa on purposes and is not to be construed, under any circumstances, by implica on or otherwise, as an offer to sell or a solicita-on to buy or trade any commodi es or securi es whatsoever. Informa on is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or

possible where projec ons of future condi ons are a empted. Futures trading is not suitable for all investors, and involves the risk of loss. Past results are no indica on of future performance. Futures are a leveraged investment, and because only a percentage of a contract’s value is require to trade, it is possible to lose more than the amount of money ini ally deposited for a futures posi on. Therefore, traders should only use funds that they can afford to lose without affec ng their lifestyle. And only a por on of those funds should be devoted to any one trade because a trader cannot expect to profit on every trade.

The Daily Livestock Report is made possible with support from readers like you. If you enjoy this report, find if valuable and would like to sustain it going forward, consider becoming a contributor. Just go to www.DailyLivestockReport.com

to contribute by credit card or send your check to The Daily Livestock Report, P.O. Box 2, Adel, IA 50003. Thank you for your support!

2011/12 Y/Y

USDA Estimate

USDA Feb Est

USDA Mar Est

April Trade Estimate

% Change

Planted 91.9 97.2 97.2 97.2 6%

Harvested 84.0 87.4 87.4 87.4 4%

Yield 147.2 123.4 123.4 123.4 -16%

Beginning stocks 1,128 989 989 989 -12%

Production 12,360 10,780 10,780 10,780 -13%

Imports 29 100 125 125 331%

Supply, total 13,517 11,869 11,894 11,894

Feed and residual 4,548 4,450 4,550

Ethanol for fuel 5,011 4,500 4,500

Food, seed, other 1,426 1,387 1,387

Domestic use, total 10,985 10,337 10,437

Exports 1,543 900 825

Use, total 12,527 11,237 11,262 11,070

Ending stocks 989 632 632 824Avg.

Estimate

Stocks/Use 7.9% 5.6% 5.6% 7.4%

million acres

bushels

million bushels

2012/13 Projection

Corn Supply & Use, USDA & April Trade Estimates