August 15, 2011


Iowa's corn receives positive forecast



The USDA gave Iowa's agriculture favourable forecast as the state's corn yield will be 12 bushels more than last year and prices will remain in the range of US$7/bushel for most of next year.


The increase in Iowa's yield contrasted with the reduction in the expected overall harvest nationally. The USDA cut the national yield from 158.7 bushels per acre, which it forecast earlier this summer, to 153 bushels per acre Thursday (Aug 11), largely because of poor planting conditions in the northern and eastern parts of the Corn Belt and drought in the South.


Tight corn supplies will persist through 2012 and will continue to support prices in the US$7 per bushel range, double what corn brought 14 months ago, the USDA said.


Iowa is the nation's largest corn- and soy-producing state.


However, the USDA report has the following implications.


The higher corn prices will increase the cash received by Iowa farmers from US$8-9 billion last year to US$15-17 billion for this year's crop, based on current prices. Soy receipts to Iowa farmers will increase from about US$4.5 billion in 2010 to US$6.1 billion this year at current prices.


High corn prices mean higher costs. But cattle and hog producers are riding high at present, with prices at near-record levels because of strong export demand and smaller domestic herds. On the Chicago Mercantile Exchange on Thursday, slaughter-ready cattle traded up US$2.15 per hundredweight to US$116.45, and hogs were up US$0.93 per hundredweight to US$107.20, a 2011 high.


Additionally, supermarket shoppers will likely see a continuation of higher meat prices. Hamburger prices are up about 10% this year, and bacon has risen 25%. The latest weekly USDA wholesale meat price report shows pork prices up almost 25% from a year ago and beef prices up 15-20%.


Meanwhile, soy yields are predicted at 41.4 bushels per acre nationally and 52 bushels per acre in Iowa.


As acres shifted from soy to corn, total soy production will drop nationally from 3.3 billion bushels last year to 3.1 billion bushels in 2011.


Iowa's soy production will drop from 496.2 million bushels last year to 473 million for the coming harvest, the USDA said.


Impact of hot July weather in Iowa is still a worry


One concern as harvest approaches in October will be the actual yield. Iowa farmers have warned that the July heat wave, coinciding with pollination, could reduce Iowa's corn yields.


"Extremely dry conditions and above-normal temperatures in the central and southern Plains caused severe stress to both irrigated and nonirrigated corn acreage," the USDA said in its report on the corn crop.

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