Federal forecasts show US farmers will harvest dramatically less grain and soybeans than expected this year, failing to ease high prices and rebuild low global supplies. The global market, however, shows good harvest prospects.
The US Department of Agriculture in its monthly crop report slashed its outlook for the autumn harvests after damaging heat and dryness took its toll on corn and soybean fields in July, while excessive rains hampered spring wheat plantings.
The agency now forecast farmers will produce 12.914 billion bushels of corn this year, down 4.1% from its estimate last month. Although just below record levels, the harvest comes as booming global demand for corn has left supplies historically low.
The USDA cut its forecasts for the soybean harvest by 5.2% to 3.056 billion bushels and reduced its outlook for US wheat production by 1.4% to 2.077 billion bushels.
This month's crop report for corn and soybean production is closely watched because it is the first for the upcoming crop based on field surveys rather than just statistical trends. The surveys revealed damage from hot, dry weather in July.
For the corn crop, the USDA estimated the average US yield for corn at 153 bushels per acre, down 5.7 bushels per acre from last month's projection. The department also lowered its inventory forecast for corn harvested this year to a 16-year low of 714 million bushels, down from last month's prediction of 870 million bushels.
The USDA did say it expects the tight supplies to trim domestic demand and exports, lowering its forecasts for total use by 2.5% to 13.16 billion bushels for the upcoming crop year, which runs from September 2011 to August 2012. Still, the usage number out paces the agency's production estimate.
The department was criticized heavily last year for overestimating the corn crop in August and then slashing its outlook repeatedly in the fall.
Oilseed projection in minor
As for soybeans, federal forecasters pegged the average yield at 41.4 bushels per acre, down from the USDA's July prediction of 43.4 bushels per acre.
Excessive rain and flooding in soybean growing areas led to planting delays earlier this year and then excessive heat in July hurt crops in states like Indiana, Kansas, Missouri and Kentucky, the USDA said.
US oilseed production for 2011/12 is projected at 91.7 million tons, down 4.7 million from last month. Soybean, canola, and sunflowerseed production are all projected lower.
Global oilseed production for 2011/12 is projected at 451.4 million tons, down 4.1 million tons from last month mostly due to a reduction in the US soybean crop.
Reductions for soybeans, rapeseed, and cottonseed are only partly offset by increased sunflowerseed and peanut production.
Lower soybean production is projected for the United States, China, and Ukraine. China’s production is projected at 14 million tons, down 0.3 million due to reduced harvested area.
Brazil’s soybean production is projected at 73.5 million tons, up 1 million due to higher expected yield. Production for Brazil’s 2010/11 crop is also raised this month to a record 75.5 million tons based on record yields.
Rapeseed production is reduced for Ukraine and Belarus reflecting lower yield prospects for both countries.
Other changes include higher sunflowerseed production for EU-27, higher rapeseed production for Australia, higher peanut production for China, and lower cottonseed production for Brazil.
Lower US wheat supplies
The agency also lowered its forecast for US wheat production this year, primarily because of the excessive rains that brought sharp delays for spring wheat farmers in northern Plains states.
The new production forecast for "other spring wheat," not including durum, is 522 million bushels, a 5% decrease from what the USDA predicted a month ago.
"Flooding and prolonged wet weather during the spring and early summer months slowed crop development in most states," the USDA said.
Total use for 2011/12 is lowered 30 million bushels with a reduced outlook for exports more than offsetting an increase in expected feed and residual use.
Exports are projected down 50 million bushels with increased competition, particularly from FSU-12 countries, where production prospects are raised.
Projected feed and residual use is raised 20 million bushels, reflecting a continuation of competitive prices for feed-quality wheat and lower projected corn supplies.
More wheat globally
Global wheat supplies for 2011/12 are projected 11.4 million tons higher with higher beginning stocks and a sharp increase in production.
World wheat production for 2011/12 is raised 9.7 million tons with increases in FSU-12, India, China, and EU-27 more than offsetting a reduction for Argentina.
Russia production for 2011/12 is raised 3.0 million tons on harvest reports for winter wheat and continued favourable weather in most of the country’s spring wheat areas.
Ukraine production is increased 3.0 million tons on higher-than-expected yields; however, heavy rains during harvest have reduced this year’s crop quality.
Kazakhstan production is increased 1.0 million tons on abundant spring and early summer rainfall.
India wheat production is up 1.9 million tons based on the latest official government estimates.
China production is raised 1.5 million tons based on the latest official government indications.
Production is increased 1.4 million tons for EU-27 with increases for France, Romania, and Bulgaria.
Harvest results from France indicate yields were hurt less by prolonged spring dryness than early reports had suggested. Partly offsetting is a 1.5-million-ton reduction in expected production for Argentina as the latest planting progress reports suggest less acreage increase this year.
World wheat ending stocks for 2011/12 are projected 6.7 million tons higher at 188.9 million tons. Stocks are expected to decline slightly from 2010/11 with higher usage, but remain 62.9 million tons above their recent low in 2007/08.
Coarse grains up outside US
US feed grain supplies for 2011/12 are projected lower this month with sharp drops in forecast corn and sorghum production.
Corn production for 2011/12 is forecast 556 million bushels lower with a reduction in harvested area and lower expected yields. Yield prospects were sharply reduced due to unusually high temperatures and below average precipitation during July across much of the Corn Belt.
Other significant 2011/12 feed grain changes include a sharp reduction in the forecast of US sorghum yield and production with prolonged drought and excessive heat in the central and southern Plains.
Global coarse grain supplies for 2011/12 are projected lower. This decline is driven by reduced corn and sorghum production in the United States with foreign corn, barley, and oats production all expected higher.
Corn production is raised for Brazil, Ukraine, and EU-27, but lowered for Egypt. Barley production is raised for Ukraine and Argentina, but lowered for EU-27. World oats production is raised slightly with an increase for EU-27. World rye production is reduced with a smaller expected crop for EU-27.