The USDA projected corn yields in 2012 have dropped more than 15% month-to-month, after a 12% reduction last month, due to the worst drought in the Midwest since 1956. U.S. corn supplies are estimated at a nine year low and U.S. corn and soybean prices reach record levels.
Average corn yield in the U.S. has declined by over 40 bushels per acre in the last two months including a 22.6 bushel reduction this month. At the beginning of the year there were record estimates of average corn yields north of 160 bushels per acre; this average has been reduced to 123.4 bushels per acre and the lowest since 1995/96.
U.S. 2012/13 corn production was forecasted at its lowest level since 2006/07, at 10.8 billion bushels, compared to 13.0 billion bushels last month.
2012/13 U.S. corn usage was reduced by 1.5 billion bushels to 11.2 billion, the lowest usage in the last six years, due to demand destruction from high prices. Corn imports in 2012/13 were increased 45 million bushels due to competitively priced foreign supplies, and increased domestic corn prices. The 2012/13 projected range for season-average corn prices was increased to a record $7.50 to $8.90 per bushel.
2011/12 ending stocks were estimated 118 million bushels higher due to reduced exports, declined corn use for ethanol, and an increase in imports.
Global coarse grain supplies in 2012/13 were estimated to decrease 56.5 million tons, mostly due to the reduction in the U.S. corn crop. Offsetting lower supplies was larger beginning stocks in the U.S. and Brazil
We will be keeping a close eye on weather patterns and the upcoming harvest season to see how accurate these predictions are.
2012/13 U.S. soybean production has been projected down 358 million bushels to 2.7 million bushels due to decreased yields and lower harvested acres. Average soybean yield was projected at 36.1 bushels per acre, 4.4 bushels lower than last month's projection.
2012/13 U.S. soybean supplies were projected 12% lower than last month to a nine year low. U.S. exports were reduced 260 million bushels to 1.11 billion bushels. The 2012/13 average soybean price was increased to record levels of $15.00 to $17.00 per bushel, a $2.00 increase on both ends of the range.
2012/13 U.S. wheat supplies were increased this month by 54 million bushels due to increased production and imports. Production in 2012/13 has been increased by 44 million bushels due to increased yields for winter wheat, durum, and other spring wheat.
2012/13 U.S. wheat ending stocks have been projected 34 million bushels higher. The season average wheat price for 2012/13 was projected at $7.60 to $9.00 per bushel.
Global wheat supplies for 2012/13 were decreased by 2.1 million tons. This reduction was due to lower production in the FSU-12.
Drought has been the main focus in this year's growing season. Going forward, commodity markets will closely watch the harvest data to see actually how bad the crop will be.
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