New US corn output forecast pushes down prices

 

 

The USDA has increased its estimate for 2009 US corn production to a new record on Tuesday (Jan 12), shocking traders who anticipated a decline after a difficult harvest.

 

The new estimate sent Chicago futures prices plunging, with March corn down the daily 30-cent limit or 7% to US$3.92-1/2 and January soy down 3.7% to US$9.65 per bushel.

 

The corn crop was pegged at 13.151 billion bushels, up 230 million bushels from the government's last forecast and up 330 million bushels from analysts' average estimates of 12.821 billion bushels. The USDA projection even topped the highest trade estimate of 12.996 billion bushels.

 

But the USDA said it may make further revisions to the estimate in its March 10 report because unusually wet weather left significant acreage unharvested. Analysts said there could be as much as 5% of the crop left to harvest in spring.

 

The 2009 soy harvest was forecast at a record 3.361 billion bushels, which also topped analyst estimates of 3.338 billion bushels and was up from the previous USDA projection of 3.319 billion bushels.

 

USDA also raised its forecast for soy production in Brazil and Argentina.

 

Growing stockpiles of the crops in the US and other parts of the world may lead to lower prices, said analysts.

 

The harvest delays for corn and soy combined with poor prices led to the smallest winter wheat plantings in 97 years, the USDA said, releasing its first estimate of seeded acreage, which was far smaller than traders had expected.

 

Winter wheat plantings for 2010 were estimated at 37.097 million acres, below analysts' average estimate of 40.501 million acres, and down 14% from 2009. The USDA projection was below the lowest trade estimate of 38.387 million acres.

 

The smaller plantings may eventually support new-crop wheat futures, but the glut of wheat and corn on the world market will pressure prices in the near term, analysts said.

 

The USDA has projected US exports from the 2009 crop will be the smallest in 38 years, hampered by competition from Russia and Canada.

 

Wheat stocks were projected at 976 million bushels - the highest in more than 20 years - above estimates of 914 million and up from previous USDA estimates of 900 million.