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Corn+Soybean Digest

USDA Issues First Forecast of 2008-09 Corn Crop

The U.S. Department of Agriculture today released its monthly World Agriculture Supply and Demand Estimate (WASDE), which included the first estimate of the 2008-09 corn crop, the National Corn Growers Association notes.

USDA is projecting 86 million acres of corn will be planted this year, of which 78.8 million will be harvested. USDA also forecasts 153.8 bu./acre yield, which is based on trend-line yields. The estimate projects production of 12.1 billion bushels, 7% lower than the record 2007-08 crop.

“The lower acreage number is based on USDA’s earlier forecast from the Prospective Plantings report, and it’s important to note that producers are in the field now planting corn to meet the market needs,” said NCGA President Ron Litterer. Revised crop acreage estimates are expected in June.

“It’s also important to note skyrocketing input costs, such as fertilizer and diesel fuel, has tempered corn acres.”
On the demand side, USDA is projecting feed and residual use will decline to 5.3 billion bushels. Increased distillers dried grain feeding and substitution of other feedstuffs will compensate for a significant portion of the reduced corn usage, although a modest reduction in red meat production is also projected.

Exports to foreign markets are also projected to decline from the 2007-08 record. “We have seen corn farmers in other countries like Argentina, Brazil and South Africa have responded to higher commodity prices and expanded production,” said Litterer. “This will increase the global supply of coarse grains ensuring continued availability for world markets.”

USDA projects ethanol production will continue to expand to meet U.S. fuel demand, but it notes that plant construction and expansion has begun to slow down.

Finally, based on these production and demand projections, USDA is forecasting a 763 million bushel carry-out for the coming crop. This is the amount of corn that will be left over at the end of next year after all uses have been met.

The USDA average price for corn next year is estimated at $5.50 per bushel, up from the current $4.25.
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