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Smaller US Corn Crop Confirmed

by 5m Editor
13 September 2011, at 9:32am

US - The USDA&rsquo;s 12 September, 2011 <em>Crop Production</em> report confirmed expectations of a smaller US corn crop than forecast in August.

The September soybean production forecast, however, is larger than the August forecast and the forecast size of the foreign wheat, coarse grain and soybean crops also exceed the August forecasts.

The 2011 US corn crop is now forecast at 12.497 billion bushels, 50 million larger than the 2010 crop, but 417 million smaller than the August forecast. The lower forecast reflects a US average yield of 148.1 bushels, compared to 153 bushels forecast last month.

Yield expectations were reduced by 10 bushels in Iowa; nine bushels in Illinois; six bushels in Missouri and Nebraska; and five bushels in Indiana, Kansas and Ohio. Forecast yields were increased for a few states, including Michigan. The US average yield projection is near the average market expectation.

In a separate report, the USDA’s World Agricultural Outlook Board increased the estimate of corn consumption during the year ended 31 August, 2011 by 20 million bushels (10 million each for domestic processing and exports). Corn stocks on 1 September 2011 are now forecast at 920 million bushels. Actual stocks will be revealed in the USDA’s September Grain Stocks report to be released on 30 September.

For the current marketing year, the smaller production forecast forced a reduction in the projected level of consumption and year-ending stocks. Projections were reduced by 200 million bushels for feed and residual use and 100 million bushels each for domestic processing and exports. Stocks on 1 September 2012 stocks are projected at 672 million bushels and the 2011-12 marketing year, average farm price is projected in a range of $6.50 to $7.50, $0.30 higher than the August projection and well above the $5.20 average of the past year.

The forecasts of corn production in 2011-12 were increased for Argentina, Brazil and the Ukraine but reduced for Egypt and Canada. The projection of ending stocks outside of the US is slightly larger than projected last month but smaller than stocks at the beginning of the year.

The US average soybean yield is now forecast at 41.8 bushels, 1.7 bushels below the 2010 average but 0.4 bushel above the August forecast. The yield forecast was unchanged for Illinois; was reduced by one bushel for Indiana, and Iowa; and was increased for Michigan (three bushels), Minnesota (one bushel), Nebraska (three bushels), and Ohio (two bushels). The 2011 US soybean crop is forecast at 3.085 billion bushels, 244 million smaller than the 2010 crop, but 29 million larger than the August forecast.

The USDA’s September WASDE report reflected an increase of five million bushels in the projection of the domestic soybean crush during the year ended 31 August 2011. For the current year, the projection of US exports was increased by 15 million bushels. Stocks of US soybeans are expected to total 225 million bushels on 1 September, 2011 and 165 million on 1 September 2012.

The 2011-12 marketing year average farm price is projected in a range of $12.65 to $14.65, $0.15 higher than the August forecast and well above the $11.35 average of the past year. The forecast of 2011-12 foreign soybean production was increased marginally (0.4 per cent), as was the projection of year-ending stocks outside the US. Those stocks, however, are expected to be smaller than at the beginning of the year.

For wheat, the USDA increased the forecast size of the 2011-12 crops for Canada, the European Union and the Ukraine. World ending stocks are projected to be larger than forecast last month and slightly larger than stocks at the beginning of the year.

For the US, the projection of food use of wheat during the current marketing year was reduced by five million bushels and the projection of exports was reduced by 75 million bushels. Year-ending stocks are projected at 761 million bushels, 90 million larger than projected last month but 100 million smaller than stocks at the start of the year. The 2011-12 marketing year average farm price is projected in a range of $7.35 to $8.35, well above the $5.70 average of the previous year.

Taken together, the September USDA reports are negative for near-term soybean and wheat price prospects. Many observers, however, believe the soybean production forecast will be reduced in October. The reports were generally supportive for corn prices.

Some analysts interpreted the USDA’s sharp reduction in the forecast of corn consumption as a sign of significant demand weakness. The reduction, however, was more a statement of availability. Some corn demand weakness is anticipated in 2012 but for now, prices will have to stay high in order to trim consumption. There is also some expectation that the October production forecast will be slightly smaller than the September forecast.