July 10, 2010

 

 

While there was the government's prediction that this year's crop will be a record thanks to ideal growing conditions early in the season, still, US corn supplies are being drawn down by voracious demand for animal feed.

 

In forecasting sharply lower corn carry-over stocks, the USDA said 1.478 billion bushels of corn will be in US grain bins on August 31 and 1.373 billion bushels at the end of next summer. Traders had expected 2009/10 end stocks of 1.4 billion bushels and 2010/11 end stocks of 1.3 billion bushels.

 

Smaller stocks this year are the result of higher-than-expected corn use as livestock feed, said USDA. For 2010/11, they would flow from smaller plantings and the smaller carry-over from this year. In all, the corn supply would be 250 million bushels smaller in 2010/11 than USDA estimated a month ago. Consumption would exceed this year's harvest.

 

USDA trimmed its projection of this year's corn crop to 13.245 billion bushels, down 125 million bushels but still a record, due to smaller plantings. The reduction in crop size and end stocks were foreshadowed in USDA reports on June 30 that drove up corn futures prices.

 

A month ago, USDA said this year's end stocks would be 1.603 billion bushels, and for the new marketing year 1.573 billion bushels.

 

In a pair of reports, USDA raised its forecast of this year's wheat crop to 2.216 billion bushels, up 7% from June due to higher yields, and projected a cotton crop of 18.3 million bales weighing 480 lbs (218 kg), up 10% on larger plantings overall and the best crop weather in the Southwest since 1994/95.

 

Traders expected the all-wheat figure to be 2.163 billion bushels. For cotton, they expected 17.968 million bales.

 

USDA also estimated 175 million bushels of soy will be in storage on August 31, down 10 million bushels from its previous estimate, and 360 million bushels at the end of 2010/11, unchanged from June.

 

USDA will make its first estimates of the fall harvest on August 12. The estimates include field surveys. USDA's projections assume normal weather and yields.

 

USDA has projected a corn yield of 163.5 bushels an acre, the second-highest ever. Some traders say the early and balmy planting season could result in higher yields.

 

USDA said its corn crop projections are within 7% of the year-end figure, on average, but end-stock projections vary by as much as 35% from the final figure. Its winter wheat forecast has a margin of 7%.