July 12, 2012

USDA expects less corn, soy due to drought

The USDA has reduced its 2012 crop projections for corn and soy on Wednesday (July 11), as the Midwest drought threatens corn and soy yields.

The average corn yield this year, USDA said in its monthly supply and demand report, is now estimated to be 146 bushels per acre, down from the 166 bushels per acre it predicted a month ago.

And USDA cut its prediction for the average soy yield to just 40.5 bushels per acre, down from 43.9 bushels per acre.

"Persistent and extreme June dryness across the central and eastern corn belt and extreme late June and early July heat from the central Plains to the Ohio River Valley have substantially lowered yield prospects across most of the major growing regions," USDA said.

With the cut in yields, farmers are now forecast to produce 12.97 billion bushels of corn this year. That's down from the record-breaking level of 14.79 billion bushels that USDA was predicting a month ago, but still more than the 12.358 billion bushels farmers produced last year.

Soy production this year is now forecast at 3.05 billion bushels, about 5% lower than the 3.205 billion bushels USDA predicted in June.

And lower production will mean weaker exports, lower domestic stocks and reduced soymeal and soyoil production, USDA said.

"Soy crush is projected at 1.61 billion bushels, down 35 million reflecting the impact of higher soy meal prices on meal exports and domestic disappearance," the USDA said. "Soy exports are for 2012-13 are reduced 115 million bushels to 1.37 billion, reflecting lower U.S. supplies."

USDA cut its forecast for corn exports in the 2012-13 marketing year by 300 million bushels to 1.6 billion bushels and also said less of the crop will be going to make ethanol.

The ethanol industry is now forecast to consume 4.9 billion bushels of corn, down from the June forecast of 5 billion.