A challenging weather year for farmers and ranchers all across the country is clearly reflected in yesterday’s crop report released by the Agriculture Department with drops shown in production, stocks and acreage forecasts for corn compared to the May report.
And with the expected drops in both production and supply, USDA is forecasting record prices not only for corn but also for wheat and soybeans. Prices for all three commodities were moved upward from the May estimates due to weather challenges. The cotton price remained the same as the May estimate, but it is still a record.
“There is no doubt that the wild weather year we’re seeing is impacting all the crops farmers produce,” said Todd Davis, crops economist with the American Farm Bureau Federation. “Drought and floods are taking their toll on cotton, corn, wheat and other crops, and USDA’s newest numbers demonstrate just that.”
In its June World Agricultural Supply and Demand Estimates released today, USDA reduced planted corn acres by 1.5 million acres from its March planting intentions survey to 90.7 million acres. USDA is projecting U.S. corn production to be 13.2 billion bushels this year, still a record, but down 305 million bushels from the May estimate.
Davis said corn inventories are still tight and farmers are hoping the weather will cooperate so there will be enough production to increase supplies to a more comfortable level. USDA pegs ending stocks for the 2011/2012 marketing year at 695 million bushels, down significantly from the 900 million bushel estimate in the May report.
“This is a very, very tight stocks situation, representing just 19 days of supply. We clearly need a big crop this year to build our supply reservoir,” Davis said. “Farmers can still make up for planting delays brought on by flooding, but they clearly need cooperative weather in July and August to make a good corn crop.”
With corn in particular taking a hit, the National Corn Growers Association pointed out the track record of corn producers meeting demand.
“As corn growers, we continue to face the same question: ‘Will there be enough corn?’ Reports this early in the season do not always take into account the stronger impact good summer weather has on a corn crop than the planting completion date,” said NCGA President Bart Schott, a North Dakota corn grower. “We know that there are many things farmers can do in the months ahead to help ensure the record crop the USDA is projecting and that there is enough corn for all needs.
“American farmers have a history of rising to meet challenges. We also have a history of overproducing and I’m concerned it won’t be long until we face overproduction and prices below the cost of production. This is what others in the ag sector are now facing.”
The early information about May flooding in the lower Ohio and Mississippi River valleys and June flooding along the Missouri River valley, with only a 100 million bushel decrease in demand, reduced ending stocks for the 2011 crop from 900 million to 695 million bushels. This resulted in a 50-cent increase in the projected average farm price for corn.
“We are still a long way from September 2012, when the ending stocks number becomes a reality and officially final,” Schott said. “This is often a figure that changes greatly through the course of the season. The 2009 crop saw an increase of more than 500 million bushels in its ending stocks estimate between June 2009 and June 2010.”