Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 10/8/10

USDA raised its average corn price estimate to a range of $4.60 to $5.40 per bushel, up 60 cents on both ends of the range as it lowered its corn production and ending stocks forecasts for the year that ends next August.

The agency raised its average soybean price estimate to a range of $10 to $11.50 per bushel, up 85 cents on both ends of the range, in part, on the coattails of higher corn prices. The soybean meal price is projected at $290 to $330 per ton, up $20 on both ends of the range.

This is the second month in a row USDA has substantially raised corn and soybean price forecasts in its World Agriculture Supply and Demand Estimates report, boosting the top of the corn price range by $1.30 per bushel since August.

Based on conditions Oct. 1, USDA pushed its corn production forecast down 4 percent from last month to 12.7 billion bushels, which is 3 percent lower than last year on lower expected yields. The soybean crop forecast at 3.4 billion bushels, was down 2 percent from last month, but still 1 percent above last year.

Corn stocks
USDA now estimates there was more corn available at the end of the 2009/10 marketing year on Sept. 1 than earlier predicted, as livestock producers fed less corn and an early harvest meant some new-crop corn was used before the Sept. 1 start of the 2010/11 marketing year.

USDA expects the opposite, however, by Sept. 1, 2011, when it predicts corn stocks will fall to 902 million bushels, which would be a 14 year low, according to BMO Capital Markets analyst Kenneth Zaslow.
Processor shares tumble

While corn and soybean futures prices soared to the daily trading price limit on the Chicago Board of Trade, Wall Street punished protein processor shares on the news of higher feed costs.

In mid-morning trade, Pilgrim’s Pride and Sanderson Farms shares were down nearly 5 percent. Tyson Foods shares were down about 8 percent while Smithfield shares were down nearly 6 percent on the New York Stock Exchange. Hormel Foods shares, however, were up by about 0.5 percent.

“Higher corn costs are negative for protein companies, but appear to be curtailing (2011) production,” said Deutsche Bank analyst Christine McGlone in a note to investors.

Zaslow told investors despite corn price concerns, he maintains his “outperform” rating on Tyson Foods and Sanderson Farms shares, predicting the near-term effect of higher corn prices could tighten the protein environment in 2011.

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