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USDA trims corn ending stocks, yields

Jeff Caldwell 11/09/2011 @ 7:33am Multimedia Editor for Agriculture.com and Successful Farming magazine.

Despite lowered projected yields and tighter expected ending stocks for U.S. corn, USDA expects the per-bushel price range to stay put from last month's estimate. And now, at least until there's a "hiccup" in production and stocks, the current price range for the grains is probably going to remain intact.

Wednesday's World Supply/Demand Estimates (WASDE) report shows corn production is forecast 123 million bushels lower than last month's estimate, reflecting a 1.4-bushel-per-acre decline from October. That makes this year's projected yield -- 146.7 bu/acre -- the lowest since 2003/2004.

"Projected U.S. ending stocks are lowered 23 million bushels," according to Wednesday's report. "The season-average farm price is unchanged at $6.20 to $7.20 per bushel."

In Wednesday's Crop Production report, USDA shows corn and soybean production just slightly lower than last month's guess. Corn's forecast at 12.3 billion bushels, while soybeans are seen at 3.05 billion bushels. That soybean number is 9% lower than a year ago, and if realized, the corn number will net the nation its smallest corn crop size since the 2003 crop year.

The numbers are, in the short term, slightly bullish for corn and essentially neutral for soybeans and wheat, says U.S. Commodities trader and analyst Don Roose. The numbers aren't enough of a departure to change the fundamentals and outside market factors at home and abroad that are at center stage in not just the grain markets, but the financials around the world.

"With the outside markets as weak as they are, the sharper higher dollar and the world equity markets being soft and energies being lower, those all probably overshadow this report," Roose said Wednesday morning. The risk-off trade around the world is starting to develop again. I think what today says is it isn't enough to shake us out of the range we've been in."

Looking ahead, Roose says crop fundamentals -- namely production prospects and grain stocks in the U.S. and South America, where USDA raised soybean production slightly in Wednesday's reports -- will be the main focal points. "There are no problems in South America; we can get the acres we need there and in the U.S.," Roose adds. "We're probably stuck in this price range until one of those factors changes. We've got world production on the grains starting to bounce back."

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