October 15, 2007

More US corn seen for 2007/08 US crop

Corn production in the US for 2007/08 is slightly to increase due to favourable crop conditions and reported good crop yields, according to a survey of analysts conducted by Dow Jones Newswires.

Results show the average estimate for corn production was 13.459 billion bushels, 151 million bushels above the 13.308 billion forecast in September by the US Department of Agriculture (USDA).

The average bushel per acre yield was 157.7 bushels per acre, up 1.9 bushels from the USDA's September estimate.

Corn production and yields appear to be stronger based on the increased use of genetically modified seeds, which helped the crop despite a drier year.

A slowdown in domestic demand - led by less corn used for ethanol and animal feed - and the increase in production is behind the bump up in ending stocks, analysts said.

The slowdown in corn noted in the quarterly stocks report was probably due to a reduction in feed usage. The increased use of distillers grains in livestock feed contributed to the reduction in corn as feed, analysts said.

Forecasts say foreign demand for US corn will increase, offsetting some of the decline in domestic consumption.

While world corn production is expected to grow based on the expected gain in US production, market participants will be looking for information regarding China's 2007-08 corn production.

Last week, the US Grains Council estimated China's corn crop at 139 million tonnes compared to the 147 million tonnes the USDA projected in September due to drought stress and heat experienced in the growing season.