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We believe price weakness in old crop CBOT Corn offers a buying opportunity as soft export demand is more than offset by US feed consumption, which appears to be running at a pace well above the level needed to reach USDA’s forecast.
· Contractions in animal numbers have been smaller than expected, with declines in cattle numbers offset by moderate increases in other sectors.
· Stocks of non-corn feedstocks in the US are at multi-decade lows, reducing the possibility to substitute away from corn in feed rations.
· Declining demand for US corn for ethanol and export will not provide enough supply to prevent the need for further rationing of feed use
· Hog and poultry producers are expected to maintain animal numbers as the profitability outlook improves into mid-2013, although nearby margins remain mixed.
