Voracious demand and a smaller-than-expected crop will bring the tightest U. S. corn supply in 15 years, the government said Sept. 10, but its forecast for the drought-stressed world wheat supply was not as low as expected.
The Agriculture Department said the U. S. corn stockpile would shrink to 1.116 billion bushels by the end of 2010-11, down 19.5 per cent in a year. The stocks-to-use ratio of 8.3 per cent would be the smallest since 1995-96.
With the fall harvest underway, USDA cut its U. S. corn crop forecast by two per cent to 13.16 billion bushels – a bit below forecasts for 13.2 billion bushels – due to hot, dry late-summer weather that helped prices rise by nearly 17 per cent since August.
USDA cut its forecast of the world wheat crop for the fourth month in a row, but its forecast of 643 million tonnes was not as low as expected. USDA lowered its forecasts for Russia’s wheat harvest by 2.5 million tonnes from August and the European Union’s by 2.4 million tonnes. USDA lifted its forecast for the U. S. soybean crop by one per cent from its August estimate.
Corn futures prices rose on the Chicago Board of Trade after the USDA forecast, while wheat futures slipped and soybeans fell too.
The world wheat crop would be the smallest in three years, since fears of a food shortage were rampant. But supplies are far larger than in 2008 and USDA raised its forecast of 2010-11 wheat end stocks by nearly two per cent, to 177.79 million tonnes, due to larger supplies in Canada.
ECONOMIC SWEET SPOT
U. S. farmers “are in an economic sweet spot” of large crops and high prices “and we think this will persist well into 2011,” said analyst Mark McMinimy of Washington Research Group. “Downstream users, however, such as meat processors and baking companies and food manufacturers will likely labor under higher input costs.”
USDA estimated the farm-gate price for this year’s corn crop would average $4.40 a bushel, the highest ever. Season-average prices for wheat and soybeans would be the third-highest. USDA said higher feed prices will discourage beef, pork and poultry production in 2011. It said per-capita meat consumption of 206.5 lbs would be 1.2 lbs lower than forecast in August.
With the fall soybean harvest underway, USDA forecast a record crop of 3.483 billion bushels, up one per cent from its August estimate. Despite near-record exports of 1.485 billion bushels, end stocks would more than double to 350 million bushels.