In its monthly Crop Production and World Agricultural Supply and Demand Report released last Friday, USDA cut this season's corn and soybean crop projection. While this latest estimate dropped slightly below market expectations it's still on track for the nation's second largest corn crop and the fourth largest soybean crop.
USDA now projects the corn harvest to bring in 12.07 billion bushels. That's 2 percent less than the August estimate, and 8 percent below last year's cop. Late season stress across the Corn Belt from dry weather triggered USDA's crop forecast reduction. Market analysts were expecting USDA to put the crop at about 12.15 billion bushels, according to Dow Jones.
The average corn yield dropped from 155 bushels per acre in August to 152.3 bushels in Friday's report. That compares to last year's average at 151.9 bushels. Based on anecdotal evidence in the field, some analysts such as Steve Meyer and Len Steiner, who write the Chicago Mercantile Exchange's Daily Livestock Report, question the likelihood that USDA's September estimate is on track. Early harvests are coming in sharply lower than expected.
USDA is still looking for 79.3 million acres to be harvested -- 87 million were planted. Again, Meyer and Steiner are skeptical that harvested acres will be that high.
The food, seed and industrial use levels, which includes ethanol, remained at 5.445 billion bushels, with ethanol use at 4.1 billion bushels. The ethanol's capacity is 5.3 billion bushels, leaving some analysts to question whether USDA's estimate is too low.
As for feed and residual, USDA dropped it to 5.2 billion bushels -- 100 million less than August's level and 850 million less than 2007. Even with some creative calculations, Meyer and Steiner emphasize that cattle, hog and poultry numbers simply could not be cutback quickly enough to match USDA's feed-use estimate.
USDA did cut its ending corn stocks forecast for Sept. 1, 2009 by 115 million bushels. It raised its season-average corn price to a range of $5 to $6 per bushel, up 10 cents from its August forecast.
As for the soybean crop, USDA forecast this year's production at 2.93 billion bushels, down 1 percent from the August forecast but up 13 percent from last year. Market analysts' had expected a 2.95 billion bushels.
USDA also increased its season-average soybean price to $11.60 to $13.10 per bushel, another 10-cents increase from its August forecast.
USDA projected soybean meal prices to be $330 to $390 per short ton, which is unchanged from its August estimate.