After a strong start to the spring growing season yields have seen a dramatic drop with the worst drought in decades blanketing 60% of the country. With heat and dryness impacting key growing regions USDA slashed corn production about 17% from the latest forecast. Jim Hemminger with Top Third Ag Marketing says the drop was expected…
Which is why after the initial reaction the market moved higher then dropped a bit lower in morning trade. Wheat production is forecast at 2.72 billion bushels, up 2% from the July report which put pressure on the morning trade. As for beans…
Trade was anticipating a higher yield which caused the upside reaction in the bean pit. Hemminger says that’s the only expectation that really surprised him…
As for corn, crops tours through the midwest are scheduled between now and the end of the month. Trade will be on pins and needles as additional details come available..
Which means extreme amounts of volatility in the weeks and months ahead.
The U.S. Department of Agriculture Friday slashed its forecast for corn production this year by about 17% as drought conditions in key growing regions worsened.
Farmers are now expected to produce just 10.779 billion bushels of corn this year, the USDA said in its monthly World Agricultural Supply and Demand Estimates report. That’s a sharp drop from the 12.97 billion bushels the agency predicted a month ago and the reduction exceeded expectations from some traders and analysts.
The new forecast puts U.S. corn production at its lowest since 2006, the USDA said.
Corn yields have suffered sharply under the worst drought in decades that now covers more than 60% of the U.S. and nearly all major farming regions.
USDA’s new estimate for average corn yield in the U.S. is just 123.4 bushels per acre and that would put it at the lowest level in 17 years. Last month the USDA was predicting the average corn yield at 146 bushels per acre.
Demand for this year’s crop is also expected to decline along with production, but the USDA still pushed its forecast for 2012-13 ending stocks lower.
“Ending stocks for 2012-13 are projected at 650 million bushels…and the smallest carryout since 1995-96,” the USDA said in the supply and demand report.
The July report predicted ending stocks at 1.183 billion bushels.
Damage to the corn crop is generally seen as irreversible because the crop has already gone through its delicate pollination stage. Timely rains, though, could benefit the U.S. soybean crop that will complete pollination in August.
Still, the USDA has reduced its prediction for U.S. soybean production to 2.692 billion bushels, down from the agency’s July forecast of 3.05 billion bushels.
The USDA estimate for average soybean yield dropped this month to 36.1 bushels per acre, down from 40.5 bushels per acre.