August 13, 2009

US farmers this year will reap their largest soy crop ever and their second-largest corn crop, mammoth harvests that will deflate an ethanol-fueled price boom, the government said on Wednesday (Aug 12).

 

In its first estimate of the fall harvest, the USDA estimated the soy crop would be a record 3.199 billion bushels, up 8 percent from 2008, and corn would total 12.761 billion bushels, up 5 percent from 2008 and the second-largest on record.

 

Bumper crops and lower prices may constrain food prices, forecast to rise by 3 percent this year and 3.5 percent in 2010. That would be modest compared with a 5.5-percent increase - largest since 1990 - in 2008, when grain and oil prices set record highs.

 

Allendale Inc analyst Joe Victor said dry August weather could result in tighter soy supplies next summer. The US stockpile is forecast to dip to a barely adequate 110 million bushels before this year's harvest begins in a few weeks.

 

This year's soy crop will sell for an average US$9.40 a bushel at the farm gate and corn for an average US$3.50 a bushel, USDA said. Both would be lowest in three years.

 

Market prices for corn are below the USDA forecast. USDA said many farmers sold corn in advance of a sharp downturn in cash and futures prices in early June.

 

At the Chicago Board of Trade, corn for delivery in December sold at midday Wednesday for US$3.33 a bushel, up 2 cents. November soy were US$10.40 a bushel, up 1-1/2 cents.

 

Farm-gate prices for grain and soy have doubled this decade, propelled by a boom in ethanol production. One-third of this year's corn crop will be used to make fuel ethanol, compared with 11 percent of the 2004 crop.