Average corn yields may drop to 146.2 bushels an acre from the eight-year low of 146.7 bushels an acre the USDA estimated previously, according to the survey. The 2010 crop averaged 152.8 bushels an acre.
The soybean harvest will total 3.048 billion bushels, based on the survey, up slightly from the 3.046 billion bushels the USDA estimated in November. Still, the crop would be down 8.5 percent from 3.33 billion bushels in 2010.
Corn and soybean crops last year were hampered by adverse weather in parts of the Midwest, as a wet conditions delayed fieldwork over the spring and a heat wave baked fields during July. The weather problems contributed to a corn market rally that sent futures to an all-time high near $8 a bushel in June.
Supply and Demand
Serious drought problems are affecting nearly half of Argentina’s corn and soybean cropland, and report indicate “irreparable” damage has already happened, according to Doane Advisory Services. Brazil’s crops have also been hurt by heat and dryness.
As a result, Doane expects the USDA’s next monthly Supply and Demand update will reveal a reduction in the forecast for Argentina’s corn crop of 4 million to 5 million metric tons from the current estimate, 29 million metric tons, or 1.14 billion bushels.
Brazil’s corn crop, which the USDA pegged at 61 million metric tons, may be cut by 1.5 million to 2 million metric tons.
“South American weather is the dominant market factor in the corn market,” Doane said in a Jan. 6 report. Argentina had adverse weather and subpar yields in four of the past five years, Doane said. “Lower South American production will translate into stronger export demand for U.S. corn later this year and into 2012-13.”
South America’s weather troubles triggered buying in Chicago’s grain futures markets, sending corn futures up 13 percent from nine-month lows reached in mid-December. In trading Jan. 9, March corn futures rose 8 ½ cents to $6.52 a bushel.
The Argentina and Brazil crop estimates may influence the decisions farmers in the U.S. will make on which crops to plant this year, said Mike North, senior risk management advisor with First Capitol Ag.
“The question mark at this point is how the USDA approaches recent dry weather in South America and its impact on corn and soybean production,” North said. “Those estimates will temper much of the discussion concerning direction of balance sheets going into the spring planting season in the U.S.