USDA Slightly Lowers Corn Crop

USDAThe September crop production forecast from the U.S. Department of Agriculture slightly lowers this year’s drought stricken corn crop to 10.7 billion bushels, with an average yield of 122.8 bushels per acre – the lowest since 1995. That would still be the eighth-largest corn crop in history, despite the worst drought conditions in more than 50 years.

On the demand side, the latest World Agricultural Supply and Demand Estimate increased 2012/13 livestock feed demand by 75 million bushels to 4.15 billion. Corn use for ethanol and co-products was unchanged at 4.5 billion bushels. However, the Renewable Fuels Association (RFA) notes that because about one-third of every bushel of corn used for ethanol returns to the feed market as distillers grains, feed use will account for approximately 5.5 billion bushels in 2012/13 on a net basis, compared to net corn use for ethanol of 3.15 billion.

“This report should bring some calm and increased certainty to the markets,” said RFA President Bob Dinneen. “With each passing day, we have a better sense of the size of this year’s crop. We are thankful that it appears very little additional damage was done to the corn crop in late August and early September. It is truly remarkable that even in the face of the worst drought in 50 years and the hottest July in recorded history, U.S. farmers were able to produce a corn crop of this size. This morning’s report also clearly shows that all end users are sharing in the pain and participating in demand rationing. The notion that the ethanol industry is somehow insulated from demand rationing because of the RFS is shown to be patently false, with ethanol use projected down 10% from last year and feed use reduced by less than 6%.”

Globally, USDA is projecting the second-largest corn crop in history. Production in Argentina is up more than 30% over last year, while Mexico increased output 19%, South Africa 17%, Canada 9%, and China 4%. At 2.71 billion metric tons, USDA is also expecting the total 2012/13 grain supply (coarse grains, wheat, and rice) to be the second-largest ever. The U.S. ethanol industry is expected to use just 2.9% of the global grain supply in 2012/13.

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