USDA seen lowering corn output
Market watchers expect the U.S. Department of Agriculture to lower its forecast for the size of this year's U.S. corn and soybean harvests in a key report Thursday, after dry, hot weather across the Farm Belt stressed crops in August.
The unfavorable weather accompanied the nation's soy crop through its crucial, yield-determining growth stages, leading many analysts to expect a sharp drop in this month's production estimates. Analysts see the corn crop as less vulnerable to dryness because it largely underwent its main development phase in July.
The USDA, in its monthly supply-and-demand report due at noon EDT Thursday, will update forecasts for corn, wheat and soybeans. Analysts will closely watch the projections for corn and soy crop yields and total output.
Market watchers expect the USDA to lower its forecast for soybean production due to persistent hot, dry weather in major oilseed producing states such as Minnesota, Iowa and Illinois, which were hit recently by a flash drought.
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Analysts on average expect the USDA to cut its forecast for soybean output to 3.15 billion bushels, a 3.3% decline from its projection last month of 3.255 billion bushels, according to a Wall Street Journal survey.
The USDA is expected to pare its forecast for soybean yields to 41.3 bushels an acre, a 3.1% drop from its last forecast of 42.6 bushels.
Tim Hannagan, an analyst with Walsh Trading Co. in Chicago, said he thinks the USDA will lower projected corn and soybean yields significantly because weekly crop-progress reports by the agency recently have shown deteriorating conditions. Those assessments are based on visual observations of fields.
In the most recent report of crop development across the Farm Belt, the USDA rated 52% of the soy crop in "good" or "excellent" condition as of Sunday, down from 64% at the start of the month.
"We know roadside looks at fields can be very inaccurate," Mr. Hannagan said. "But it's a start."
Meanwhile, cool temperatures across the Midwest in much of July eased stress on the nation's corn crop, while it underwent its crucial pollination phase, which determines the number of kernels on each ear of corn. This has had the effect of moderating anticipated damage to the nation's corn fields.
For corn, analysts expect the USDA to lower estimated production to 13.65 billion bushels, down 0.9% from its forecast last month of 13.76 billion bushels. That would still be a record high for a U.S. corn crop. Production was 10.78 billion bushels last year, when the worst U.S. drought in decades curtailed output.
Analysts expect the government to forecast a corn-crop yield of 153.9 bushels an acre, down 0.3% from the USDA's forecast last month of 154.4 bushels an acre.
Although drought conditions in the Farm Belt this summer are much less widespread than a year ago, parts of the Midwest and Great Plains, stretching from Nebraska through Iowa and western Illinois, are struggling with dryness. Heavy spring rainfall in the Midwest left crops with healthy levels of soil moisture to draw on, but meteorologists said the recent dry spell has resulted in some places experiencing conditions similar to those of 2012.
One factor working in favor of the nation's soybean crop is it has in the past shown resilience to stressful weather late in the growing season. Last year's crop, for example, turned out better than some had expected, thanks to timely rains in early September.
Write to Kelsey Gee at email@example.com
Corrections & Amplifications
This item was corrected at 6:32 p.m. EDT to show that the USDA forecast 3.255 billion bushels of soybeans in August. The original incorrectly stated 3.42 billion.
(END) Dow Jones Newswires
September 10, 2013 14:21 ET (18:21 GMT)
DJ USDA Seen Lowering Forecast for Corn, Soybean Output -Survey->copyright