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Slightly Smaller Crops (10/12/11)

October 12th, 2011

Chad Hart , ISU Extension Grain Marketing Specialist, provides a summary of the latest report from USDA.

Most of the numbers came in within expectations, but the corn and soybean crops continue to get smaller.  USDA adjusted corn area down for 2011, taking out 400,000 planted acres and 500,000 harvested acres.  With yields holding steady at 148.1 bushels per acre, that puts production at 12.433 billion bushels.  That is about 60 million bushels below last month’s estimate and this month’s trade expectation.  It also means that the 2011 corn crop is projected to be slightly smaller than the 2010 crop.  However, the increase in ending stocks from last month’s Grain Stocks report offsets this production decrease and we are looking at higher corn supplies than last month’s projections.  Soybeans also saw a slide in harvested area, down 100,000 acres.  With yields also down 0.3 bushels to 41.5 bushels per acre, production is estimated at 3.06 billion bushels.

In general, corn yields in southern states are a little higher than last month’s estimates, while corn yields in northern states are a little lower.  Similar story in soybeans with the directions shifted, soybean yields in eastern states are a little higher than last month’s estimates, while soybean yields in western states are a little lower.  Iowa’s yields are projected at 169 bushels per acre for corn, up 2 bushels from last month, and 50.5 bushels per acre for soybeans, down 0.5 bushels.

On the demand side, the bigger adjustments are in reaction to the previous stocks report.  2010/11 corn feed and sweetener demands are moved lower to explain the higher than expected ending stocks.  2011/12 export demand for both corn and soybeans are moved lower on the basis of increased competition from South America and some switching back to wheat in global feed markets.  2011/12 ending stocks are slightly higher than expected for corn, at 866 million bushels.  Soybean stocks are slightly lower than expected, at 160 million bushels.  So even with lower supplies and demands this month, soybean market continues to tighten, while the corn market is building expected stocks.  Season-average price ranges run from $6.20 to $7.20 per bushel for corn, down 30 cents from last month, and $12.15 to $14.15 per bushel for soybeans, down 50 cents.

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