May 15, 2007

 

USDA estimates low corn yield for 2007/2008

 

 

The US Department of Agriculture pulled out this year's biggest surprise as it estimated a lower average yield for US corn production of 150.3 bushels per acre for 2007/2008.

 

The USDA report said the estimate reflects the "slow planting progress and other areas of the country are probably wetter than normal for this time of year, particularly in parts of Iowa and in Missouri, where there are significant flooding issues."

 

A USDA official said traders previously estimated a corn production of 152 to 156 bushels but the lower projection is due to the grain's soaring prices. Nevertheless, profitability in most hog, cattle and poultry sectors which use corn for feed can pull up output.

 

USDA raised corn usage for ethanol to 3.4 billion bushels, but reduced exports to 1.975 billion bushels.

 

The USDA moved old crop corn ending stocks higher in May, based on weaker old crop demand. The department had also lowered food, feed and industrial use outside of ethanol by 10 million bushels and lowered exports 50 million bushels, to 2.2 billion bushels.

 

The figures resulted to an old crop carryout sitting at 60 million bushels higher than last month, at 937 million bushels. The official said "we're likely to see more interest in selling a rally in this market than there will be a lot of new longs getting in for the short-term."

 

For soybean crush, an increase of 5 million bushels is seen with ending stocks pegged at 610 million bushels.

 

The USDA projects new crop soybean plantings at 67.1 million acres in line with USDA's March planting survey. An average yield of 41.5 bushels would produce a crop of 2.745 billion bushels.

 

Ending stocks for 2007-08, at 320 million bushels, "is almost half of our old crop ending stocks estimate, however it's still quite adequate and requires almost no rationing of price," the USDA said.

 

The report also said soybean prices will likely remain firm.

 

Globally, world soybean carryout was raised slightly despite projected lower US production, to 61.8 million tonnes--the biggest after several years--due to higher ending stocks seen for Brazil and Argentina.

 

The USDA has lowered old crop wheat ending stocks by 10 million bushels, due to a 10 million bushel increase in exports, which included 5 million bushels of hard red winter wheat and 5 million bushels of hard red spring wheat.

 

The report said USDA estimated total new crop wheat acres at 60.3 million acres.

 

Feed and residual use is higher for new crop wheat as exports of 975 million bushels are also higher. Kent Beadle of the USDA said the figures are definitely a good pickup in usage as though production is a little higher than anticipated, "the ending stocks number of 469 million bushels is certainly reasonable for the price levels from the current trading."

 

Global ending stocks for wheat are projected lower, 113.3 million metric tonnes compared to current stocks of 120.3 million metric tonnes. Beadle said the decline could open some upside potential for US wheat producers.