Source: MEATINGPLACE, 10/12/11

USDA boosted its forecast for domestic ending stocks of corn by 29 percent from a month ago, above what analysts were expecting, sending corn futures lower during Wednesday’s session.

The agency also reduced its annual average corn price forecast by 30 cents to a range of $6.20 to $7.20 per bushel from a month ago.

USDA estimated 2011-12 corn ending stocks at 866 million bushels, above the average analyst forecast of 806 million in a Dow Jones survey and up from September’s estimate of 672 million.

Total U.S. corn use for 2011-12 was projected 50 million bushels lower on reduced exports, USDA said in the World Agricultural Supply and Demand Estimates report.

Livestock analysts Len Steiner and Steve Meyer, writing in the CME Group's Daily Livestock Report, called the latest WASDE data slightly bearish for corn because of higher U.S. and world stocks, moderately bullish for soybeans due to tighter projected U.S. supplies and moderately bearish for wheat due to higher U.S. and global supplies.

“In our view, the fact that the report did not contain any explosive bullish news on corn, which was part of the frenzy yesterday, could negatively affect futures in the short term. Increased wheat supplies could also provide some relief, particularly in world feed markets,” the CME analysts wrote.

Corn futures prices for December delivery were down 7-1/2 cents to $6.37 cents per bushel in midday trade on the Chicago Board of Trade in reaction to the WASDE report. On Tuesday, nearby corn futures contracts traded up the daily permissible limit on anticipation of a bullish report.

Proteins
USDA also raised its 2011 forecast for total red meat and poultry production to reflect higher beef, pork and turkey production, but lower broiler production. The increase in beef production reflected higher expected cow slaughter due to drought conditions in the Southern Plains and high hay prices.

Commercial hog slaughter was expected to be higher in the third quarter than previously forecast, while broiler production was expected to decline as reduced egg sets offset relatively heavy bird weights.

Cattle prices were forecast higher for the remainder of 2011 and through 2012 on continued strong demand, while hog price projections were lowered for the last quarter of 2011 and into 2012 on expected higher supplies and slaughter. For broilers, the pace of price recovery in 2012 was expected to be slower than forecast last month, with demand still relatively weak.

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