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USDA cuts corn supply, yield guesses

Jeff Caldwell 09/12/2011 @ 7:33am Multimedia Editor for Agriculture.com and Successful Farming magazine.

In its monthly world supply and demand report, USDA lowered total corn supplies by 442 million bushels, with total corn use for this year projected at 400 million bushels lower. "Projected feed and residual use is reduced 200 million bushels mostly reflecting lower expected residual disappearance with the smaller forecast crop," according to Monday's WASDE report.

Meanwhile, in Monday's monthly Crop Production report, USDA pegged this year's corn crop 3% lower than its August estimate. The crop is now forecast at 12.5 billion bushels. That's still larger than the 2010 crop, though, and USDA data shows it would still be the third-largest crop on record.

Yield-wise, USDA officials expect the crop to average just over 148 bushels/acre, down almost 5 bushels/acre from last month's guess. That would end up being the lowest average yield in 6 years if realized.

For soybeans, USDA upped its production estimate by 1% Monday, but that's 7% lower than last year's crop. Average yields are expected to almost reach 42 bushels/acre, up slightly from the August estimate, but down almost 2% from last year's crop. "If realized, the forecasted yield in Nebraska will be a record high," according to the report. Officials expect that state's soybean crop to average 55 bushels/acre.

Supply-wise, Monday's WASDE report shows this year's soybean crop will be 3.085 billion bushels, up 29 million bushels from the August estimate, "due to higher yields." Ending stocks are projected 10 million bushels higher at 165 million, "as supplies are only partly offset by increased exports," according to Monday's report.

Monday's numbers from USDA -- namely higher ending stocks and world grain production -- are, at least in the short term, bearish for the grains. Add to that a shaky world economic picture and early trade response could be double-digit price slides once Monday's trade opens.

"The one thing that stands out is world production went up and ending stocks went up. But, the government continued to signal we've got some rationing to do. We're going to have to maintain a certain price to do that," says grain market analyst with U.S. Commodities in West Des Moines, Iowa, Don Roose. "That isn't done usually by lower prices. Maybe now it's a 'bend but not break' situation for the market."

Looking ahead now, Roose says world economic conditions and a potential freeze in the next week in the northern Corn Belt will be the key things to watch.

"It's all about this balancing act," he says.


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