WASDE: Corn production forecast reduced

By Susanne Retka Schill | September 08, 2008
Web exclusive posted Sept. 15, 2008 at 10:41 a.m. CST

A dry August in much of the Corn Belt reduced the USDA's corn production forecast for 2008. In the September World Agricultural Supply and Demand Estimates report released Sept. 12, the USDA reduced its projections by 216 million bushels, down to 12.1 billion bushels with a forecast national average yield of 152.3 bushels per acre, down 2.7 bushels from last month. In turn, it also lowered projections for ending stocks by 115 million bushels to 1,018 million bushels and increased its projections for the season average farm price by 10 cents on either end of the range to between $5 and $6 per bushel.

U.S. sorghum production for 2008-09 was raised 16 million bushels in the September WASDE reflecting a 2.4-bushel-per-acre increase in the forecast yield. The sorghum season-average farm price is projected at $4.45 to $5.45 per bushel, up 5 cents on each end.

The USDA lowered its projections for global coarse grain production for 2008-09 by 2.4 million tons. Higher European barley and oats production, higher corn production in China and Mexico and higher Canada coarse grains production are more than offset by reduced United States and Argentina corn output and lower Australia barley output. China corn production was raised 3.0 million tons as good summer rainfall throughout most of the growing areas supported a projected record corn crop. Corn production for Argentina was lowered 3.0 million tons as more favorable returns for soybeans and continued uncertainty about government export policies reduce producer incentives for growing corn. Mexican corn production was raised 1.0 million tons as good summer rainfall improves crop prospects in most of the key growing areas. Other notable changes this month include a 0.8-million-ton reduction in Philippines corn production and a 0.4-million-ton reduction in EU-27 corn production.

RFA analyzes U.S. corn crop

In anticipation of the September WASDE report, the Renewable Fuels Association did an analysis of U.S. corn production and use, concluding that as the size of the corn crop grows, so too does its uses.

The RFA compared the 2002-'03 U.S. corn crop of 9.0 billion bushels with the 13.1 billion bushel crop of 2007-'08. Five years ago, 59 percent of the 9.5 billion bushel crop was used for feed, 17 percent was exported, 12 percent was used for ethanol and 13 percent was used for other purposes. Of the 13 billion bushels produced last year, 12.8 billion was consumed, a 35 percent increase over 2002. Ethanol usage grew to 23 percent of the crop.

"While the amount consumed by ethanol production increased, so too did the entire crop and every other usage," the RFA pointed out. Feed and residual use grew from 5.6 billion bushels in 2002 to 6.1 billion bushels in 2007. Similarly, exports doubled from 1.2 billion bushels in 2002 to 2.4 billion bushels in 2007, while ethanol usage jumped from 1.1 billion bushels in 2002 to 3 billion bushels in 2007.

"Because the size of the annual corn crop continues to increase over time, discussing corn's various uses in the context of percentages can sometimes be misleading," the RFA wrote in its analysis. "For example, a similar percentage of the crop was exported in 2002 and 2007, but in real numbers, the amount of corn exported in 2007 was 800 million bushels more than in 2002 (an increase of 50 percent.) Similarly, a considerably smaller percentage of the crop was fed to livestock in 2007 than in 2002, but in real numbers, the amount of corn fed to livestock increased by nearly 10 percent." The RFA said that in the discussion of how much corn is used for ethanol, one must recognize that one-third of the corn is returned as feed in the form of distillers grains.

The entire analysis, titled "Ethanol and the U.S. Corn Crop" is available on the RFA Web site: http://www.ethanolrfa.org/objects/documents/1898/corn_use_facts.pdf.