WASDE: Corn projections down

By Susanne Retka Schill | June 02, 2008
Web exclusive posted June 11, 2008 at 4:46 p.m. CST

Weather markets will rule the summer, cautions the USDA in its monthly World Agricultural Supply and Demand Estimate released June 10, stating that "these projections are tentative. Variation in area and yields may result from weather developments, economic factors, and policy changes."

The June 10 report, which projects the impact of delayed planting and cool, wet weather on the 2008-'09 corn supply, adjusted the 2008 crop 390 million bushels lower than last month's projections at 11.7 billion bushels based on lower than expected yields. The national average yield is projected at 148.9 bushels per acre, 5 bushels below last month, and 6 bushels below the 1990-2007 trend. This month's reduction reflects slow planting progress, slow crop emergence, and persistent, heavy rainfall across the Corn Belt. The latest rounds of torrential rainfall are expected to reduce plant populations and nitrogen availability, particularly for corn planted after mid-May.

Corn supplies for 2008-09 are projected 340 million bushels lower this month. Partly offsetting lower production is a 50-million-bushel increase in beginning stocks resulting from lower projected 2007-08 exports. Feed and residual use for 2008-09 is projected 150 million bushels lower on reduced feeding demand with higher prices, increased wheat and sorghum feeding, and lower than expected residual losses with the smaller crop. Exports are lowered 100 million bushels reflecting tighter U.S. supplies and increased export competition with higher foreign production. Ending stocks for 2008-09 are projected at 673 million bushels, down 90 million from last month, and 760 million below the 2007-08 forecast. If realized, 2008-09 ending stocks would be the lowest since 1995-96.

The 2008-09 marketing-year average farm price for corn is projected 30 cents higher on both ends of the range at $5.30 to $6.30 per bushel. Price forecasts for 2007-'08 corn and sorghum are also raised reflecting higher expected summer prices.

Global 2008-09 coarse grain production is lowered 3.1 million tons this month. The 9.9-million-ton cut in U.S. corn production is only partly offset by increased corn production in China and the Philippines, and increased corn and barley production in Russia and Ukraine. Foreign corn production is projected 7.6 million tons higher this month and 19.5 million tons above the current 2007-08 forecast. China corn production for 2008-09 is raised to 153.0 million tons, up 3 million from last month, reflecting a higher yield consistent with recently released 2007-08 estimates and 2006-'07 revisions by China's National Bureau of Statistics. Production for China is raised 6.8 million tons for 2007-08 on a higher reported yield. Corn production for Russia and Ukraine are raised 1.5 million tons and 2 million tons, respectively, on higher indicated area. Brazil corn production for 2007-'08 is raised 2 million tons reflecting above average rainfall and higher expected yields for second-crop corn.

World coarse grain consumption for 2008-09 is increased 4.3 million tons this month with increased foreign consumption more than offsetting reduced U.S. corn use. China accounts for most of the increase with corn consumption raised 7 million tons mostly on higher expected feeding as hog production recovers from disease problems. Corn exports for 2008-09 are raised 1 million tons each for Brazil and Ukraine, offsetting most of the U.S. reduction. Global coarse grain ending stocks are projected higher for 2008-09 with corn stocks up 4.3 million tons, mostly reflecting higher production for China. Global corn ending stocks for 2007-'08 and 2006-07 are also raised, again mostly on changes for China.

The WASDE report also details projections for other major U.S. crops, projecting continued strong prices for soybeans and a recovery of wheat supplies. Soybean stock projections are adjusted down reflecting higher export projects for this market year. Soybean production and trade are unchanged, but the crush is reduced 10 million bushels mainly reflecting reduced prospects for domestic soybean meal use. Soybean oil use for biodiesel production is lower, having dropped more quickly than expected due to high prices.

In contrast, wheat supplies are projected higher with winter wheat production forecast at 40 million bushels higher and wheat yields higher in most states. Global wheat production for 2008-'09 is expected to be higher, with higher production from FSU-12, China and the United States. Nearly ideal weather continues to support crop prospects for Russia and the Ukraine. Partly offsetting the increases are reductions for Afghanistan, Argentina and Syria due to dry conditions and reductions in Canada's projected yields due to a cool, dry early season.

With Tuesday's release of the USDA's latest World Agricultural Supply and Demand Estimates, the National Corn Growers Association said that while there is reason to be concerned about the weather's impact on the corn crop, growers are confident they can still produce an adequate crop.

"Thanks to a very successful 2007, we started this year off with a significant level of beginning stocks that can help see us through a season of reduced production," said NCGA President Ron Litterer, a grower from Greene, Iowa.