How many acres of corn are needed in 2013?
Under the scenario outlined here, consumption of U.S. corn during the 2013-14 marketing year would total 12.79 billion bushels. With beginning stocks of 647 million bushels as currently projected by the USDA, imports of 15 million bushels, and ending stocks of 1.279 billion bushels (10 percent of consumption), the 2013 crop would need to be a record 13.407 billion bushels. How many acres of corn would need to be planted to produce 13.407 billion bushels of corn? Acreage harvested for grain differs from planted acreage by the magnitude of acres harvested for silage and the magnitude of abandoned acres. In the past 10 years, that difference has ranged from 6.662 million acres (2005) to 9.225 million acres in the current drought year. The average difference in the 9 years prior to 2012 was 7.256 million acres. A forecast of 7.25 million is used for 2013.
Needed acreage, then, depends on the expectation of the average corn yield in 2013. We start with an expectation of trend yield. Trend yield can be calculated in a number of ways. We use the period from 1960 through 2012 to calculate trend yield for 2013. However, we use a crop weather model to adjust actual yields during that period for varying weather conditions and calculate a linear trend of those adjusted yields. For 2013, that trend calculation will be near 162 bushels. If the average yield is at that level, 90.01 million acres of corn would need to be planted in 2013. The actual average yield will depend on the nature of the growing season, with poor weather likely to reduce the average below trend by more than good weather would increase the average yield above trend. Here, we consider an average yield 10 bushels below trend and an average yield 5 bushels above trend. Under the low yield scenario, planted acreage would need to total 95.45 million acres and under the high yield scenario acreage would need to total only 87.53 million.
The job of the corn market is to motivate the "correct" magnitude of planted acreage in 2013. To that end, the market will continue to assess demand prospects and prospects for the 2013 growing season. It is problematic, of course, that acreage decisions have to be made before either demand or growing season weather is known. Given the yield shortfalls of 2011 and 2012 and on-going drought conditions in much of the U.S., the market may need to reflect expectations of a below-trend yield in 2013. The current price of December 2013 corn futures, near $6.25 per bushel, is consistent with this scenario. It is important to recognize that even under this scenario planted acreage will not need to exceed that of 2012 unless demand is stronger than currently anticipated or historically large yield concerns persist into the spring.
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