This year’s combination of weather events has taken a serious toll on U.S. grain and oilseed crops. That picture was reinforced by USDA’s National Agriculture Statistics Service in its November 9 crop production estimates . The U.S. average corn yield at 146.7 bushels per acre was down 1.4 bushels per acre from the October forecast. The average yield is estimated to be down from a disappointing 152.8 bushels last year, 153 bushels per acre in the August forecast, and a 1990-2008 trend yield of about 162 bushels per acre. Total production is forecast at 12.31 billion bushels. This estimate indicates production will be about 744 million bushels or 5.7% below reported corn utilization in the year ended August 31, 2011 The production estimate is still somewhat tentative and will be updated in the early January season-final crop report. At this writing, a considerable amount of corn remains to be harvested in Michigan, Ohio, Indiana, and Pennsylvania because of continued rains. That region produces about 1.7 billion bushels of corn.
About half of the adjustment to the smaller crop can be made by reducing corn carryover stocks, although that will eliminate any reserve supply to offset possible weather-reduced production next year. That leaves about 350 to 375 million bushels of cuts needed in corn use from last season. Important questions facing corn users are (1) which users will cut back in response to inadequate supplies, (2) what prices will be required to generate the required cuts in use, and (3) what adjustments will be needed to bring the reductions in use.
More changes ahead in crop estimates?
History indicates and January season-final USDA crop report could show an additional yield change, although any change is expected to be small.
Figure 3 provides additional insight into crop report changes from November to the season final estimates in years when the U.S. corn yield estimate declined from September to November. The average corn yield change from November to the season final estimate in these years was -0.73%. With no change in harvested acreage, that percentage yield change would cut an additional 90 million bushels from this year’s production, with all of the decrease having to be adjusted for through a further reduction in corn use. Most analysts do not expect a decrease of that amount, but no further change in the final corn crop estimate.