USDA seen lowering corn supplies
Analysts expect federal forecasters on Wednesday to cut their projection for domestic corn supplies at the end of next summer, as delayed planting of this year's crop has reduced expectations for the size of the harvest.
The U.S. Department of Agriculture at noon EDT (1600 GMT) on Wednesday will update its estimates for the supply and demand of major agricultural commodities such as corn, soybeans and wheat.
The USDA estimates could cause sharp price swings in futures markets if they differ substantially from analysts' expectations. The agency's forecasts for crops to be harvested this year--and stockpile levels the following summer--will be watched especially closely because last year's historic U.S. drought withered crops across the Midwest and cut into available supplies. That has led to historically tight corn and soybean stockpiles since last fall's harvests.
Traders will also closely watch the agency's forecasts because of uncertainty about how much this year's corn plantings and crop yields could be reduced by planting delays. Unusually wet spring weather from Nebraska to Minnesota and Ohio led many farmers to plant corn later than normal, reducing yield expectations for the crop. Some farmers who still haven't been able to plant corn in wet fields may switch to plant soybeans instead, further reducing the size of this fall's harvest, analysts say.
In its supply-and-demand report last month, the USDA said the slow start to corn planting this year reduced prospects for crop yields. Worries about planting delays have continued since then.
Analysts expect the USDA to project that corn stocks as of Aug. 31, 2014--the end of the marketing year that will begin with this fall's harvest--will total 1.758 billion bushels, below the USDA's forecast last month of 2.004 billion bushels, according to the average forecast in a survey by Dow Jones Newswires.
The USDA could cut its estimate of corn plantings this spring by two million acres to 95.3 million acres due to the planting delays, though it could also cut its demand forecast for corn used in animal feed, said Chad Henderson, president of advisory firm Prime Ag Consultants in Brookfield, Wis.
Even with reduced plantings, corn supplies will be ample next year, Mr. Henderson said.
"I just think everyone is so focused on the few problem areas out there and not looking at the big picture," he said. Condition ratings for the corn crop are mostly favorable, as are current weather forecasts, he said.
Analysts expect the USDA to project that corn stocks at the end of the current marketing year will total 748 million bushels, below the USDA's forecast last month of 759 million bushels.
For soybeans, analysts on average expect the USDA to project domestic stocks at the end of the 2013-14 marketing year will total 273 million bushels, above the agency's last forecast of 265 million bushels. Analysts on average expect the USDA to forecast domestic soybean stocks of 125 million bushels for the end of the current marketing year, unchanged from its last forecast.