According to analysis from Agrimoney.com at the end of 2012 assessing the outlook for cereals in 2013, US maize prices gained only 7% in calendar year 2012, but the very high prices experienced when fears over the impact of the US drought were at their height led to considerable “demand destruction”, a key theme that is expected to continue in 2013. However, the very high prices of 2012 have led some analysts to “talk of” sowings of maize in the US of “close to 100 million acres” in 2013, a level not seen since the 1930s.

Rabobank expected 2013 to begin with maize prices rising above the levels prevailing at the end of 2012. This view was endorsed by Commerzbank, which expected that a “market shortage should keep prices at a high level”, although “quite a long way off their record level” in 2012.

Normal yields in 2013, however, are expected by analysts to ease the supply situation and see prices fall moderately by most estimates, between 9.3% (Commerzbank) and 14.1% (Société Générale), apart from Goldman Sachs, which suggested price declines of 21.2% from a higher starting point.

Maize: Analysts’ average price projections per quarter for 2013 (US$/bushel, Chicago front futures contract)

Source: Agrimoney.com (see below)

According to Goldman Sachs, use of corn for ethanol is likely to grow in the first half of 2013, although there remain “significant risks given the persistence of the US drought”. This accounts for the higher estimated maize price in the first and second quarters of 2013. Prices are then expected to fall by the end of the year to levels comparable to other estimates, “as the recovery in demand will lag [behind] the production rebound”. Rabobank also sees the greatest price volatility as occurring “from the second quarter of the year to the third quarter”.

Morgan Stanley broadly endorses the view of Goldman Sachs, citing “risks to South American 2012-13 production”. An improving supply situation in 2013–14 is then expected to exert a downward pressure on prices.

Rabobank expects the global stocks-to-use ratio to improve by 3.5 points to 15.9% in 2013–14, which will still be “substantially below the 10-year average of 17.2%”. It forecasts that growing global consumption of corn will “prevent stocks-to-use levels from recovering to long-run average levels”, and expects “the largest ever year-on-year increase in world corn demand” in 2013–14.

Other analysis on Agrimoney.com reviewing 2012 and prospects for 2013 suggests that government responses to weather-induced production shortfalls in 2012 (i.e. the avoidance of panic buying and export restrictions), along with the poor state of the global economy, actually helped to cushion price increases. This effectively prevented prices from surging to levels similar to those experienced in 2008.