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Have Corn Prices Peaked?

September 13, 2012
money gamble

USDA’s higher-than-expected corn production forecast will likely keep prices under pressure as harvest progress accelerates.

Yesterday, USDA’s National Agricultural Statistics Service released the September Crop Production Report that contained new survey-based forecasts of the size of the U.S. corn and soybean crops.

The World Agricultural Outlook Board released the monthly WASDE report that contains new estimates and forecasts of U.S. and world supply and consumption of corn, soybeans, and wheat.

University of Illinois ag economist, Darrell Good, discusses the reports:


Here’s a brief summary and analysis of the reports, as provided by Good.


For the 2011-12 marketing year that ended on August 31, the estimate of U.S. exports was reduced by 10 million bushels to reflect actual export data. The expectation for feed and residual use to be revealed in the September 1 Grain Stocks report was reduced by 150 million bushels in recognition of the likely higher than normal consumption of new crop corn during August. September 1 stocks of old crop corn, to be revealed on September 28, are expected to total 1.181 billion bushels.

For the current marketing year, the forecast of the U.S. average yield was reduced by 0.6 bushel to 122.8 bushels, while the forecast of acreage harvested for grain was unchanged from the August forecast. The resulting production forecast of 10.727 billion bushels is only 51.2 million bushels smaller than the August forecast and about 325 million bushels larger than the average trade guess.

Compared to the August forecast, the average yield forecasts were increased for most southern and eastern states. Forecasts for the Midwestern states were within 2 bushels of the August forecast, with the exception of the 6 bushel decline in Illinois.

The supply of corn for the 2012-13 marketing year is now forecast at 11.983 billion bushels, 108 million larger than the August forecast. The projection of feed and residual use of corn was increased by 75 million bushels, to reflect in part the use of new crop corn during the last month of the previous marketing year.

The projection of exports was reduced by 50 million bushels to a 27 year low of 1.25 billion bushels. Year-ending stocks are projected at 733 million bushels, 83 million above the August projection, and the forecast of the 2012-13 average farm price was reduced by $.30, in a range of $7.20 to $8.60.

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