Source: Rita Jane Gabbett, MEATINGPLACE, 9/12/11


USDA decreased its U.S. corn crop forecast by 417 million bushels to 12.497 billion, slightly below what analysts were expecting. The agency also pushed its annual average corn price forecast up to a range of $6.50 to $7.50 from $6.20 to $7.20 a month ago.

Based on its second Crop Report based on actual field surveys and its monthly World Agricultural Supply and Demand report, USDA dropped its forecast of total corn use for the 2011/12 marketing year that began Sept. 1 by 400 million bushels, including:
• decreasing feed and residual use by 200 million bushels
• decreasing ethanol use by 100 million bushels and
• decreasing exports by 100 million bushels.
The stocks-to-use ratio is projected at 5.3 percent, compared with last month’s projection of 5.4 percent and a historic average of about 15 percent.

USDA Agricultural economist Darrel Good had this to say about the corn forecasts:  “Some analysts interpreted the USDA’s sharp reduction in the forecast of corn consumption as a sign of significant demand weakness. The reduction, however, was more a statement of availability. Some corn demand weakness is anticipated in 2012, but for now prices will have to stay high in order to trim consumption. There is also some expectation that the October production forecast will be slightly smaller than the September forecast.”    

Deutsche Bank analyst Christina McGlone called the report bullish for corn prices, although corn futures prices were slightly lower in morning trade on the Chicago Board of Trade.

Soybeans
USDA raised its soybean production forecast to 3.085 billion bushels from 3.056 billion last month. The forecast was above what analysts were expecting.

Nevertheless, USDA also raised its average soybean price forecast for 2011/12 to a range of  $12.65 to $14.65 per bushel, up 15 cents on both ends of the range, citing higher corn prices as providing price support for soybeans.

USDA raised its soybean meal price forecast to $360 to $390 per short ton, up $5 on both ends of the range.  

McGlone called the report bearish for soybean prices. Soybean futures prices for September delivery were trading down about 20 cents per bushel in morning trade on the Chicago Board of Trade.

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