Big US corn, soy crops outpaced by high usage
Washington, September 13, 2008
US growers will reap the second-largest corn crop and the No 4 soybean crop this fall but not keep pace with the demands of foodmakers, livestock feeders, exporters and biofuels, the government said on Friday.
The US corn stockpile would shrink by one-third, to 1.018 billion bushels - a one-month supply - by the time the 2009 crop is ready for harvest, the Agriculture Department said. It would be the smallest corn "carry-over" in five years.
USDA estimated soybean use would exceed production by 15 million bushels, reducing stockpiles to a two-and-a-half-week supply next August 30. Tight supplies would boost farm-gate prices. In a monthly update on crop output and usage, USDA forecast a record farm-gate price for 2008 corn of $5.50 a bushel.
It pegged soybeans for a record-high season-average $12.35 a bushel. Food prices are forecast to rise by 5.5 percent this year, the largest increase in nearly two decades, spurred by higher meat, fruit and vegetable prices.
Based on September 1 conditions, USDA forecast a corn crop of 12.072 billion bushels, the second-largest on record, and a soybean crop of 2.934 billion bushels, the fourth-largest. Cotton was forecast for 13.85 million bales weighing 480 lb (218 kg) each, the smallest since 1989.
Private consultant John Schnittker said strong market prices would allay worries in farm country about rising prices of fuel, seeds, fertilizer, pesticides and land.
"Unless fertilizer and other prices come down with oil prices, it's going to be a tougher year for farmers ahead," said Schnittker. A University of Missouri think tank forecast a $50 an acre increase in 2009 for variable costs - items such as fuel, fertilizer and seed - to grow corn while revenue declines by $30 an acre from 2008.
USDA says net farm income, a measure of farm profitability, will be a record $95.7 billion this year. In a June report, USDA said the cost of production for corn would rise by roughly $30 an acre for corn and $15 an acre for soybeans in 2009.
A dry August in much of the US Midwest nicked corn and soybean yields, slightly reducing the size of the corn and soybean crops.
Corn yields of 152.3 bushels an acre would be the second-highest ever, although down by 2.7 bushels from an August estimate. Soybeans were forecast to yield 40 bushels an acre, down 0.5 bushel from the estimate a month ago.
Dry weather at the end of the growing season contrasted with a cold, wet spring that delayed corn and soybean planting. The crops are a couple of weeks behind normal in maturity. Cold weather usually ends the growing season in early to mid-October in the heart of the Corn Belt.
Soybeans for delivery in November SX8 surged by 28 cents, to sell for $12.04 a bushel, in midmorning futures trading on the Chicago Board of Trade.
December corn CZ8 was up 20 cents to $5.53-1/4 a bushel and December wheat WZ8 was $7.20 a bushel, down 6 cents. Because USDA based its forecasts on September 1 conditions, they do not reflect the impact of Hurricane Gustav in sugar and rice states of the South or the impact of subsequent storms. - Reuters