September 13, 2010

Floods and heat hamper US record corn yield

A mixture of flooding and a summer heatwave have deprived the US corn harvest of setting a fresh yield record, officials have said, making a deeper-than-expected cut to their forecast.

The USDA slashed by 2.5 bushels per acre, to 162.5 bushels per acre, its estimate for US corn yield this year.

The reduction, which was bigger than the 2.1-bushels-per-acre cut that analysts had expected, and took the yield estimate below last year's 164.7-bushels-per-acre figure.

The USDA attributed the reduction to a decline in the condition of the crop throughout much of the central and western Corn Belt, mainly due to above normal temperatures and less than ideal soil conditions.

In Iowa, America's biggest producing state, excessive rainfall early in August left many low-lying fields completely saturated, stunting growth and yellowing portions of the crop, analysts said.

With US farmers sowing more corn this year, the downgrade was not quite big enough to strip the crop too of its claim for the production record, although, at 13.16bn bushels, its estimated lead over last year's high was cut to a slim 50 million bushels.

Nonetheless, the output estimate fell below analysts' expectations. With the US stocks estimate also lowered, the data was viewed as supportive to prices.

Indeed, the crop's stocks-to-use ratio-a key measure of market tightness, which in turn has a big impact on prices-was to fall to 8% on the latest estimates, the lowest since 1995.

Prices gained further support from a cut by the USDA to its forecast for global stocks too, by 3.6 million tonnes to 135.6 million tonnes, reflecting also weaker hopes for Europe's corn harvest.

Chicago corn for December delivery closed 1.6% higher at US$4.78 ¼ a bushel, with the September lot adding 1.7% to a 23-month high of US$4.64 a bushel.