CME: Smaller Corn and Soybean Crops Indicated

US - CME's Daily Livestock Report for 12th September 2008.
calendar icon 15 September 2008
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USDA released its monthly Crop Production and World Agricultural Supply and Demand Estimates on Friday and they indicated smaller U.S. corn and soybean crops than had been expected by industry analysts. The data for both corn and soybeans appear below. The highlights for the corn report include:

  • A forecast corn yield of 152.3 bu. per acre compared to 155.0 in August, 151.9 last year and an average pre-report estimate of 153.3 bu.. That yield would be second only to the record 160.4 bushel per acre average national yield of 2004. Anecdotal evidence from early harvest areas indicates sharply lower yields so the accuracy of this number is in doubt.
  • USDA did not change its estimates of either planted acres or harvested acres from the August report. The feds still expect 79.3 million of the 87.0 million planted acres to be harvested. There is significant doubt as to whether this level of harvested acres will be reached.
  • Food, seed and industrial (FSI) usage, which includes ethanol, was left at August’s predicted level of 5.445 billion bu. with ethanol (4.1 billion) and other FSI usage (1.345 billion) steady as well. That ethanol usage number is 1.1 billion bu. or 37% higher than in 2007-08. The 3.1 billion bu. to be used for ethanol in ‘07-08 compares to an estimated capacity corn usage rate of 3.35 billion bu. based on ISU Center for Agricltural and Rural Development estimated capacity of 9.4 billion gallons. USDA’s 4.1 billion bu. usage for next year compares to a predicted capacity annual usage rate of 5.3 billion bu. at the end of 2009. The industry will not use 5.3 billion bu. in the 2008-09 crop year since not all of those plants/expansions will be running by year’s end. But USDA’s 4.1billion is FAR LOWER than 5.3 billion. Too low?
  • Feed and residual was lowered to 5.2 billion bu., 100 million less than the August estimate and 850 million less than last year. The 6.050 billion F&R figure for this year (+8.5%) is suspected to be too large. But even if this year’s F&R growth was just +5% (5.875 billion), the reduction to 5.2 billion amounts to 8.5% or about 6% after additional DDGS are factored in). Cattle, hog and poultry numbers could not be cut that quickly even if ALL of the signals said to cut back — and they have not said such on any consistent basis this year.
  • $0.10/bushel higher price predictions — now $5.00 to $6.00/bushel.

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