June 10, 2011

 

USDA cuts outlook for 2011 corn harvest

 

 

Low corn supplies are here to stay, with federal forecasters cutting the outlook for this year's harvest and projecting inventories to stay at levels not seen since the mid-1990s.

 

The USDA crop report caused futures prices to surge to a new, all-time high of more than US$7.90 a bushel at CBOT.

 

US farmers have struggled this spring to get their crops in the ground as wet weather has plagued portions of the corn belt. As a result, federal forecasters pegged US corn production at 13.2 billion bushels this year, a 2% decline from its May estimate, yet still a record crop.

 

The large harvest isn't seen boosting low domestic supplies, with the agency slashing its forecast for end-of-season inventories for next year to just 695 million bushels, below the 900 million bushels predicted in May. That is slightly below end-of-season corn supplies estimated for this year, but above a record low set in the 1996.

 

The USDA monthly crop report said wheat supplies are expected to tighten, while soy supplies are expected to grow. Corn futures for July delivery were 2.6% higher to US$7.8425 a bushel in late morning trade, slightly paring earlier gains. Wheat and soy were near flat in recent trading.

 

Persistent rains and flooding in the eastern Corn Belt and northern Plains reduced how much corn was planted, according to the USDA. Acres were submerged along the Ohio, Missouri, and Mississippi rivers. Farmers are thought to have planted just 90.7 million acres, a drop from the 92.2 million acres federal forecasters were expecting a month ago.

 

Demand is expected to keep supplies tight. Corn consumption by ethanol producers remains at a record high, with the USDA leaving its forecast unchanged from last month at 5.05 billion bushels. The USDA left its forecast for inventories for the current crop year, which ends August 31, unchanged at 730 million bushels.

 

Estimated inventories shrank overseas as well. The USDA cut its 2011-12 world corn stockpile forecast by 13% to a five-year low of 111.9 million tonnes due to higher estimated corn consumption for livestock feeding and industrial use in China.

 

"Not only is the US short of corn - so is the world," analysts said.

 

The USDA raised its expectations for wheat production in the upcoming season to 2.058 billion bushels, from last month's forecast of 2.043 billion bushels. Yet forecasters trimmed what is expected to be left over from last year's crop to 809 million bushels, down from the May estimate of 839 million bushels.

 

As for soy, inventories are expected to expand in the coming year due to weakening exports. China, the world's top oilseed importer, is expected to buy fewer soyfrom the US in the coming year as Brazil harvests a record crop.

 

Federal forecasters said extreme weather is expected to hit the upcoming cotton crop. They reduced their harvest estimate by one million bales to 17 million. Cotton futures for December delivery were 2.3% higher at US$1.3320 a pound in late morning trade on Intercontinental Exchange.

Video >

Follow Us

FacebookTwitterLinkedIn