November 11, 2009

US looks to historic corn corp in spite of lowered government projections

The US is still on track to produce its second-largest corn crop in history, even as the government lowered the projected size of the crop.

The US Department of Agriculture on Tuesday (Nov 10) cut its estimate of the US corn crop to 12.9 billion bushels, down one percent from its October estimate, based on a slightly smaller national corn yield estimate. Only in 2007 did the US grow more corn. Tuesday's estimate for the current corn crop is also seven-percent above 2008's crop size.

However, the lowered projections was not a complete surprise, given grain analysts surveyed by Dow Jones Newswires estimated the crop at 12.995 billion bushels.

The USDA cut national yields to 162.9 bushels per acre, down 1.3 bushels from October, but nine-bushels above 2008. The average of analysts' pre-report estimates had yield at 163.7 bushels. If the new estimate bears out, it still will be a record yield.

"Within the corn belt, forecasted yields in Minnesota and Wisconsin increased, while Illinois, Iowa, and Michigan yields decreased," the USDA said.

The government did not specifically address why it cut the corn yield size, but heavy rains in October, particularly in states like Illinois, have likely led to damage to ears and have delayed harvest. As of Sunday, only 37 percent of the crop was cut, versus the average of 82 percent done as of that date.

The lower production estimate flowed through to the bottom line, where the USDA cut the size of ending stocks--which is what is left over after accounting for supply and demand--by 47 million bushels to 1.625 billion.

In its supply and demand estimates, the USDA lowered corn exports by 50 million bushels, to 2.1 billion bushels, citing the recent slow pace of sales and shipments and increased competition from larger Black Sea corn and wheat supplies. The USDA left all other usage categories unchanged.