WASDE: Corn supply increases

By Susanne Retka Schill | October 06, 2008
Web exclusive posted Oct. 10, 2008 at 4:36 p.m. CST

The USDA raised its projections for this year's average corn yield to 154 bushels per acre in the World Agricultural Supply and Demand Estimates report released Oct. 10. The projection is up from last month's forecast of 152.3 bushels. As a result, the report also forecasts that corn production for 2008-'09 will be 12.2 billion bushels, up from last month's projections. WASDE raised its projections for ending stocks by 136 million bushels after incorporating changes from the Sept. 20 corn stocks report which raised the corn carryout from the last season.

Ethanol corn use for 2008-09 is projected 100 million bushels lower to 4 billion bushels as reduced gasoline consumption is expected to slow the expansion of blending modestly over the coming months. Other food, seed and industrial corn use is lowered 10 million bushels, reflecting slowing usage as shown in the revised numbers for 2007-'08.

The USDA dropped its projections on the season-average farm corn price by 80 cents on each end of the range, to $4.20 to $5.20 per bushel.

Global coarse grain production for 2008-'09 is raised 7.6 million tons on higher production in the European Union, Russia, Canada and the United States more than offsetting a reduction for Brazil. Corn production for Brazil is lowered 2 million tons on reduced projections of planted area for the main summer crop. Large carryover supplies from Brazil's winter corn crop, as well as lower world corn prices and higher input costs, have reduced planting incentives for 2008-'09, the WASDE report said. Projections for corn imports for Canada, Mexico and the European Union were all lowered.

The edge in the competition between corn and soybeans in the U.S. market was taken off with the WASDE report's increase in harvested soybean acres which more than offsets lower projected yields. Total soybean supplies are forecast up 111 million bushels. WASDE also lowered its forecast for the soybean crush by 25 million bushels based on weaker prospective domestic soybean meal demand. Projected prices are sharply lower, down $2 on both ends of the range to $9.60 to $11.10 for soybeans.