Third corn yield cut

10 | 11 | 2010

AGROINFO - Corn futures at the Chicago Board of Trade have surged 84 percent since summer while soybean futures are up about 37 percent during the same time.

Corn futures at the Chicago Board of Trade have surged 84 percent since summer while soybean futures are up about 37 percent during the same time.

USDA cut its forecast of the U.S. corn crop for the third month in a row due to disappointing yields, this time by 1 percent, similar to trade assessments of the crop. The crop of 12.540 billion would be the third-largest on record but fall 7 percent behind demand by exporters, livestock feeders, foodmakers and the ethanol industry.

Corn ending stocks would total 827 million bushels -- half the stockpile available at the start of this marketing year and the smallest in 15 years.

"Forecasted yields decreased from last month throughout much of the Corn Belt, with the biggest decline forecasted in Missouri, down 7 bushels an acre," said USDA, in pegging yields at 154.3 bushels an acre.

Ethanol makers will use 38 percent of this year's crop, enough to make 13.4 billion bushels of the alternative fuel through next Aug. 31, said USDA. It foresaw larger ethanol exports and said, "Ethanol prices continue to track higher with corn prices, supporting returns for ethanol producers."

An Energy Department agency also forecast ethanol production in 2011 of 13.4 billion gallons on Tuesday.

The ethanol industry expects consumption will run closer to the federal mandate for renewable fuels, which is 12.6 billion gallons for 2011, especially with a Dec 31 sunset near for the major ethanol incentive, a blender tax credit.

Hog and cattle prices rose on expectations of higher-priced feed due to smaller U.S. corn and soybean crops but were mixed at midday as corn prices stayed flat. Corn climbed above $6 a bushel for the first time since August 2008 but corn for December delivery ended the day down 9 cents at $5.76-1/4 and December wheat settled down 14-1/2 cents at $7.21-3/4 a bushel.

USDA trimmed its estimate of the wheat harvest by 1 percent, to 2.208 billion bushels, following a resurvey of durum and spring wheat growers. It lowered its forecast for ending stocks to 848 million bushels, compared with trade expectations of 855 million bushels.

Although U.S. corn and soybean output is down, the world supply is relatively unchanged. USDA forecast a larger corn crop in China, where dry summer weather raised doubts about the crop. China is No 2 in corn production to the United States.

Source: Reuters

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