USDA: 2008 corn yield is second-highest

By Susanne Retka Schill | January 12, 2009
Web exclusive posted Jan. 12, 2009, at 5:22 p.m. CST

The USDA released several reports Jan. 12, adjusting its supply and demand projections, reporting the grain stocks on- and off-farm, and summarizing the 2008 corn crop. The 2008 yield is the second highest on record at 153.9 bushels per acre, up 3.2 bushels per acre from the 2007 yield.

Lower demand for ethanol and feed prompted the USDA to increase its projected corn ending stocks from the previous month's report by 316 million bushels in this month's World Agricultural Supply and Demand Estimates report released Jan. 12. The USDA lowered its projected ethanol use for corn for the current marketing year by 100 million bushels to 3.6 billion bushels. According to the report, "sustained negative ethanol production margins since early December have reduced incentives for ethanol output. Recent increases in trading values for renewable identification numbers (RINs) that can be used in lieu of ethanol to meet mandated levels also indicate reduced demand for ethanol."

Feed and residual use was reduced 50 million bushels reflecting lower animal numbers and projected food, seed and industrial use was lowered 35 million bushels on lower-than-expected use for sweeteners and starch during September through November. Exports were also projected 50 million bushels lower based on the slow pace of sales and shipments to date. Factoring all changes, the USDA lowered its projected season-average farm price for corn by 10 cents to $3.55 to $4.25 per bushel.

Similarly for sorghum, the USDA increased the projected ending stocks for 2008-'09 by 27 million bushels on higher estimated production and lower expected feed and residual use. The sorghum season-average farm price range is projected to be $2.90 to $3.10 per bushel.

Corn production second highest
The USDA Crop Production Annual Summary estimated that 2008 corn for grain production totaled 12.1 billion bushels, which was up 1 percent from the November forecast, but 7 percent below last year's record high. The average U.S. yield was estimated at 153.9 bushels per acre, which was 3.2 bushels above 2007's average yield. The 2008 yield is the second highest on record, behind 2004, and total production is second highest, behind last year.

Sorghum grain production in 2008 was estimated at 472 million bushels, 5 percent below 2007. Planted area for sorghum was estimated at 8.28 million acres, up 7 percent from last year, with average grain yield at 65 bushels per acre, down 8.2 bushels per acre from last year.

Corn stocks down, storage capacity up
In its corn stock report released Jan. 12, the USDA said corn stock as of Dec. 1, 2008, were down 2 percent compared to December of 2007 while soybean stocks were down 4 percent and all wheat stocks were up 26 percent. Corn stored in all positions on Dec. 1 totaled 10.1 billion bushels with 6.48 billion bushels stored on farms, down 1 percent from a year earlier. Off-farm stocks, at 3.60 billion bushels, were down 4 percent from a year ago. From September through November 2008, disappearance was 3.64 billion bushels, compared with 4.06 billion bushels during the same period last year.

On-farm storage capacity increased 2 percent from the previous year, at 12 billion bushels. Iowa leads all states with 1.95 billion bushels on-farm storage capacity followed by Illinois with 1.37 billion bushels and Minnesota with 1.3 billion bushels.

On Dec. 1, off-farm grain storage capacity totaled 9.35 billion bushels, up 3 percent from the previous year. The largest increase occurred in Iowa where 125 million bushels of capacity was added in the past year. Other notable increases were shown in Illinois and Minnesota where capacity increased 57 million bushels and 30 million bushels, respectively. Two states, Kansas and California, saw decreases in capacity around 5 million bushels each.

Global trends
In global estimates, the WASDE report projected global corn production for 2008-09 5.1 million tons higher than the previous month's report, with increased corn production in China, the U.S., Mexico, Russia and EU-27 more than offsetting reductions for Brazil and Argentina. Corn production for China was raised 5.5 million tons on higher area and yields as indicated by available national and provincial government data. Mexico production was raised 1 million tons with favorable weather indicating higher yields. Production for Russia was raised 0.3 million tons on higher harvested area and higher yields. EU-27 production was raised 0.3 million tons reflecting official government statistics by France. Brazil corn production was lowered 2 million tons and Argentina lowered 1.5 million tons as extended dryness and heat during December reduced yield prospects.

The USDA lowered its estimates for world coarse grain imports and exports for 2008-09. Corn imports were lowered 1 million tons for Mexico with part of this reduction offset by a 0.3-million-ton increase in sorghum imports. Smaller reductions in imports are projected for a number of other countries where feeding is projected lower. Corn exports were lowered 1.5 million tons for Argentina and 0.8 million tons for India. Global corn ending stocks for 2008-09 were projected 12.2 million tons higher with the U.S. and China accounting for most of the increase.

RFA response to USDA reports
In responding to the Jan. 12 USDA reports on production, stocks on hand and supply/demand estimates, the Renewable Fuels Association noted that the nation's yields and total production level is remarkable given the unprecedented adverse weather conditions that plagued much of the Corn Belt during the early part of the growing season and a later-than-usual harvest in the fall. "January's USDA report paints a very clear picture of the productivity potential of American farmers and dispels the misconception that ethanol is at the root of higher corn and food prices," said RFA President Bob Dinneen. "With an expected surplus of nearly two billion bushels at the end of this marketing year, it is clear that farmers can supply ample feedstock for food, feed, fiber and renewable fuel production."

Pointing to the lower expected corn prices, lower expected use and increasingly available supply, the RFA said the numbers support the ethanol industry's defense of corn use for ethanol and undermines the credibility of those claiming the ethanol industry was responsible for higher food prices as a result of increasing demand for corn used in ethanol production.

"The misinformation about ethanol's role in higher food prices was a deliberate attempt to confuse and mislead the American public, who are still waiting for lower prices in the supermarket," Dinneen said. "Now it is time to put this manufactured hysteria behind us and focus on what is important - ensuring a secure and sustainable energy future for this country in part built on the increased production and use of all types of renewable fuel."