October 10, 2008

Corn crop, stocks bigger than expected

The U.S. Department of Agriculture’s crop production report today raised corn production and ending stocks, with production coming in at 12.2 billion bushels on 154.0 bushel-per-acre yields. This is a 1 percent gain in production (128 million bushels) and a 1.7 bushel per acre gain over last month, and if realized it will be the second largest yield on record (behind 2004). Total corn production remains the second highest on record, just behind last year.

The average pre-report guesstimate was for a 12.08 billion bushel crop.

Nebraska numbers also came in higher, with an estimated crop of 1.39 billion bushels on yields of 161 bushels per acre. A year ago, Nebraska saw a 1.47 billion bushel crop on yields of 157 bushels per acre.

For crop production details, click here.

These additional bushels, when combined with reduced use over the last quarter, have increased corn supplies. Beginning stocks for 2008-09 increased to 1.62 billion bushels, up from 1.58 billion. Feed use increased 150 million to 5.35 billion, while corn for ethanol dropped 100 million to 4.0 billion.

That leaves total ending stocks for the 2008-09 crop at 1.15 billion bushels.

USDA then cut the average expected farm price a full 80 cents to $4.20-5.20 per bushel.

The ethanol figure was cut because USDA believes gasoline consumption will slow, but adding to that is the slowing pace of new plants coming online. Conceivably, this number could shrink further.

Feed use was increased on larger supplies, reduced availability of distillers grains and "sharply lower prices."

For the supply and demand report, click here.

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