WASDE: Record corn yield forecast

By Susanne Retka Schill | July 15, 2010
Posted August 12, 2010

Once again, concerns about the wheat crop—this time in Russia and Eastern Europe—have the world commodity grain markets responding with increasing wheat prices. The market volatility had traders anticipating USDA's monthly World Agriculture Supply and Demand Estimates to see just how the agency's analysts view the global wheat issue affecting U.S. markets and just how the current corn crop is developing. Nearly all numbers for corn are pushed slightly higher in the Aug. 12 WASDE report with the exception of carry over estimates.

Beginning stocks for corn are projected 52 million bushels lower reflecting higher expected exports, corn use for sweeteners and starch, and a small reduction in projected imports for 2009-'10. The survey-based yield forecast of 165.0 bushels per acre is up 1.5 bushels from last month's projection and 0.3 bushels above last year's record resulting in corn production for 2010-'11 forecast at 120 million bushels

Domestic corn use for 2010-'11 is raised 30 million bushels reflecting higher expected corn use for sweeteners and starch. Corn for ethanol use is unchanged from the July report at 4.7 billion bushels. Exports are projected 100 million bushels higher as tighter foreign supplies of wheat and coarse grains raise prospects for U.S. corn shipments.

Despite higher production, ending stocks are projected down 61 million bushels at 1.3 billion, the lowest in 4 years. The season-average farm price is raised 5 cents on each end of the range to $3.50 to $4.10 per bushel.

Global coarse grain supplies for 2010-'11 are projected 10.6 million tons lower with reduced foreign production more than offsetting higher U.S. output. Global corn production is lowered 0.8 million tons with Russia and Ukraine each lowered 1.5 million tons and EU-27 lowered 1.0 million tons.

Global coarse grain imports are raised this month with increases for corn in China, EU-27, South Korea, and Israel, supporting higher expected corn feeding in each country. In EU-27, South Korea, and Israel, corn is expected to replace higher priced wheat in feed rations. Global coarse grain ending stocks are lowered 8.1 million tons with corn ending stocks down 1.9 million. EU-27 barley ending stocks are down 4.0 million tons accounting for most of the rest. Coarse grain and corn ending stocks are both expected to remain well above their recent lows in 2006-'07.

Record soybean crop forecast

Soybean yields are forecast at 44.0 bushels per acre, 1.1 bushels above last month's trend yield projection, and equal to last year's record yield. The first survey-based forecast of U.S. soybean production is a record 3.4 billion bushels, 88 million above the July projection, and 74 million above last year's crop. Record yield and production won't dampen prices, though. The August WASDE report increase all soybean and product prices from the previous month. The U.S. season-average soybean price for 2010-'11 is projected at $8.50 to $10.00, up 40 cents on both ends of the range. Soybean meal prices are projected at $250 to $290 per short ton, up $10 on both ends of the range. Soybean oil prices are projected at 36.5 to 40.5 cents per pound, up 2.5 cents on both ends of the range.