USDA Crop Report
WASHINGTON, August 11, 2011 – As U.S. farmers are on track to produce the third largest corn crop in history, this summer’s extreme hot and dry conditions across much of the country are hindering soybean, cotton and all wheat production. This is the latest forecast, according to the Crop Production report released today by the U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS).
Corn production is forecast at 12.9 billion bushels, up 4 percent from last year. Based on conditions as of August 1, corn yields are expected to average 153.0 bushels per acre, up 0.2 bushel from 2010, and the fourth highest yield on record. Acreage planted for all purposes is estimated at 92.3 million acres, unchanged from NASS’s June estimate in the Acreage report.
NASS reports a different picture for soybean production, which is forecast at 3.06 billion bushels, down 8 percent from last year. Based on August 1 conditions, yields are expected to average 41.4 bushels per acre, down 2.1 bushels from last year. Planted area to soybeans is estimated at 75.0 million acres, down fractionally from the previous NASS estimate.
One of the largest production declines is reported for cotton as drought plagues much of the Cotton Belt. All cotton production is forecast at 16.6 million 480-pound bales, down 9 percent from last year’s 18.1 million bales. While yield is expected to average 822 pounds per harvested acre, up 10 pounds from last year, producers only expect to harvest 9.67 million acres of all cotton, down 10 percent from 2010.
All wheat production, at 2.08 billion bushels, is down 1 percent from the July forecast and down 6 percent from last year. Based on conditions as of August 1, the U.S. yield is forecast at 45.2 bushels per acre, up 0.6 bushel from last month but down 1.2 bushels from 2010. Specifically, double-digit decreases are expected in Durum and other spring wheat production from last year due to flooding and excessively wet conditions earlier in the season.
Durum wheat production is forecast at 57.1 million bushels, down 10 percent from July and down 47 percent from 2010. The U.S. yield is forecast at 42.4 bushels per acre, up 3.7 bushels from last month but unchanged from last year. Acres planted to Durum wheat are down nearly 18 percent from the previous estimate in June, a change based on farmer re-interviews during mid- to late-July.
Other spring wheat is forecast at 522 million bushels, down 5 percent from last month and down 15 percent from last year. The forecasted yield is 42.5 bushels per acre, up 0.8 bushel from last month but down 3.6 bushels from 2010. Acres planted to other spring wheat are down 7 percent from the estimate in the June Acreage report, another result of the producer re-interviews.
The August Crop Production report contains USDA’s first survey-based estimates of yield and production for corn, soybeans and other spring-planted row crops. Between July 25 and August 6, NASS surveyed approximately 27,000 producers and also took objective field measurements from more than 4,500 plots of land in the major crop-producing states. In addition, producers in Minnesota, Montana, North Dakota and South Dakota were resurveyed for updated planted information following the June Acreage report. Crop Production is published monthly and is available online at www.nass.usda.gov.
Merle: Thanks for your thoughtful comment. We have tried to educate people about the nature of the USDA crop forecasting system. One simple but very important point is that the system assumes normal weather for whatever is left of the growing season. So, if there is poor weather for the remainder of the growing season, then we should be able to reliably project revisions in USDA crop forecasts. Our research shows that this is indeed the case. This does not mean there is anything wrong with the USDA forecasting system, just that you have to understand it in order to make the proper interpretation. It looks to us like this year is going to be a textbook example of this type of situation. August weather has been much poorer than average for big chunks of the Midwest and we will be surprised if the USDA corn yield forecast does not come down in September. Of course, what everyone really wants to know is how much! Also remember, a big part of the USDA methodology involves responses from producers indicating their expectations of final yield. Those expectations may not be well formed in early August.
From Pro Farmer: http://af.reuters.com/article/commoditiesNews/idAFN1E77P14720110826
CHICAGO, Aug 26 (Reuters) - The U.S. corn crop is shrinking
after being damaged by hot weather, hail, and wind, crop scouts
concluded this week, a development that analysts say threatens
to push up prices for food, feed, and fuel.
In March I wrote this post;
On February 4th, I wrote a post titled "Don't Cows and Chickens Have to Eat?" which basically said that the corn futures were in a speculative bubble, being pumped for profit by people who had invested 6 months earlier.
At that time farmers were being paid a Jan. spot price of $5.37 for a bushel of corn, March and July bushels were $6.48, while Oct was $5.35.
A week late July futures had been pumped to $6.85, and a week after that Feb 18th, they reached the $7.00 mark. The etf CORN rose from $41.00 to $43.00.
Today a July bushel of corn is worth $6.34 and Oct is $5.15. And farmers do make money at $5.15.
Interestingly, just after investment/trading websites were suddenly tipping all of us off on the CORN opportunity, trading volume in the etf CORN doubled as people looking to turn a quick buck jumped in on the advice. The price did not double though.
Right now the end users of corn - kellogs and coca cola and the ethanol companys for instance - are contracting to buy the corn they will use in October for $5.15/ bushel. Unless there is a weather event that wipes out acres of corn and the farmer cannot deliver $5.15 corn to Kellogs, that is about where the price will stay.
So for those of you that bought a CORN etf, that "invested" in a bushel of July corn for $7.00, You can pray for bad weather and a jump in corn prices, or take a loss, or take delivery.
Yesterday the cash price for corn was between $7.00 and $7.20 all the way out until July of 2012, and has been over $7.00 for a week or two. Irene did not help yields in New York or Vermont.
The price of diesel at the pump has been about the same since March, so it is not Gov't printing that raised the price. From the Pro farmer report:
Farm newsletter Pro Farmer, which organized the tour that
was attended by farmers, agronomists and a large number of
participants from the hedge fund industry, pegged this year's
corn yield at 147.9 bushels per acre. That compares with USDA's
August forecast of 153 bushels.
Pro Farmer estimated U.S. 2011 corn production at 12.484
billion bushels, below USDA's forecast of 12.914 billion, but
still potentially the third-largest in U.S. history.
None of this means you will starve. There will be corn in storage in the USA. But this will cost you at the grocery store.