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Watch out for falling corn stocks!

Jeff Caldwell 06/09/2011 @ 8:06am Multimedia Editor for Agriculture.com and Successful Farming magazine.

The supply scenario for corn and wheat just got tighter.

In its monthly World Supply/Demand (WASDE) report released Thursday morning, USDA lowered both wheat and corn stocks based on inclement crop weather in key areas for both crops. Thursday's report shows corn ending stocks 35 million bushels lower than last month's estimate, reflecting a lot of the planting delays and generally bad weather this spring. The new numbers also indicate a "stocks-to-use ratio of 5.2% compared with the 2010/11 forecast ratio of 5.4%," the report shows, adding that corn production is still pegged at a record 13.2 billion bushels, though that's cut 305 million bushels from a month ago.

"Corn planted area for 2011/12 is lowered 1.5 million acres from March intentions to 90.7 million acres.  Planting delays through early June in the eastern Corn Belt and northern Plains are expected to reduce planted area, more than offsetting likely gains in the western Corn Belt and central Plains where planting was ahead of normal by mid-May," according to Thursday's report. "Harvested area is lowered 1.9 million acres, to 83.2 million with the additional 400,000-acre reduction reflecting early  information about May flooding in the lower Ohio and Mississippi River valleys and June flooding along the Missouri River valley."

The net result for prices, according to USDA, is a "farm price" for corn between $6 and $7 per bushel, up 50 cents/bushel from last month's estimate.

The world wheat situation is just as tight. Thursday's report pegs U.S. wheat ending stocks 15 million bushels lower than last month's guess at 687 million bushels. Though that's above the previous 10-year average, it still sent USDA's wheat price estimate 20 cents higher than a month ago, to $7 to $8.40 per bushel for the farm price, "reflecting both tighter domestic supplies and higher expected corn prices.

"Global wheat supplies for 2011/12 are projected slightly lower this month as an increase in beginning stocks is more than offset by lower production," according to Thursday's report. "Persistent dryness, particularly in France, but also in Germany, the United Kingdom, and western Poland, has reduced yield prospects for EU-27.  Production is also reduced 1.0 million tons for Canada as flooding and excessive rainfall, particularly in southeastern Saskatchewan and adjoining areas of Manitoba, are expected to reduce spring wheat seeding."

It's a little different story for soybeans. Though prices are expected to ride the rising tide of corn prices -- to the tune of $13 to $15 per bushel, USDA estimates -- domestic ending stocks for beans are 10 million bushels higher than thought a month ago.

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