USDA crop projections reinforce need for new markets

WASHINGTON – By estimating corn supplies to exceed use by 2.5 billion bushels for the 2005-2006 marketing year, the USDA World Agricultural Supply and Demand Estimates reinforces the need for market development, notes the National Corn Growers Association.
“The USDA report shows we are still feeling the effects from the record corn crop produced in 2004,” said Leon Corzine, association president.
“There is plenty of corn supply for our traditional markets. The concern we have on the farm and as an organization is market development.
“We are continuing and will continue to produce corn; we must vigorously develop new markets and new uses for corn.
“That points to the need and importance of [National Corn Growers Association], its member states and the checkoff to create these new markets and new uses.”
Projection. USDA projects this year’s corn crop at 10.985 billion bushels, 7 percent below last year’s record of 11.8 billion bushels, but nearly 9 percent higher than the 2003-2004 crop production, which was another record year, said Max Starbuck, association director of livestock and economic analysis.
“The May report is not based on production surveys but rather on trend estimates,” he said.
“Weather still remains the key variable when estimating production this early in the growth cycle and that may be forgotten as one focuses in on the numbers.”
Optimistic. USDA optimistically puts 2005-2006 exports at 1,950 million bushels, which seems very aggressive, but increases fuel ethanol production by only 100 million bushels this crop marketing year, which seems very weak, Starbuck said.
“Ethanol use again leads in projected growth. In fact, corn-based ethanol production is progressing at a rate to surpass an annual production capability of 5 billion gallon in early 2006,” Starbuck said.
Renewable fuels. Corn growers need a Renewable Fuels Standard to sustain this domestic success, Corzine said, and trade agreements such as the Central American Dominican Republic Free Trade Agreement (CAFTA) to bolster export markets for corn.
Exports are projected to show some growth – up 150 million bushels, according to the report – but continue to be disappointing.
“Corn growers need trade agreements like CAFTA to lock in export markets and regain growth,” Corzine said.
“They also need the Water Resources Development Act. Without improvements to locks and dams and waterway infrastructures, we lose our ability to stay competitive in export markets.”