September 13, 2006

USDA sees stronger corn production on high yields

The US Department of Agriculture on Tuesday (Sep 12) again raised its forecast for US corn production in its September world supply and demand report and based the new prediction on stronger-than-expected yields, expected to be the second highest ever.

Corn production for the 2006/07 marketing year is now predicted to total 11.114 billion bushels, up from the 10.976-billion forecast made a month ago, the USDA said. That would be the second largest corn crop on record, the USDA said.

Market analysts generally expected USDA to boost its production forecast, but not as much as the 138 million bushel increase the department predicted. The average of expectations gauged by a Dow Jones Newswires survey was for a 20 million bushel increase.

The new USDA forecast predicts the new national average yield to reach 154.7 bushels per acre. That's an increase from the August forecast of 152.2 bushels per acre.

The USDA also raised its forecast for exports and lowered its prediction for ending stocks.

"Exports for 2006/07 are raised 100 million bushels reflecting reduced supplies of coarse grains and feed-quality wheat outside the United States," the USDA said.

The new corn export forecast was raised to 2.250 billion bushels. The US ending stocks forecast was set at 1.22 billion bushels, down from 1.232 billion.