On Sept. 10, the government cut its U.S. corn harvest projection 1.6 percent and said stocks of the grain will fall to a seven-year low, signaling higher feed costs as livestock and dairy producers compete with exporters and ethanol distillers for shrinking supplies.
American farmers are expected to harvest 13.16 billion bushels of corn this year, the USDA said. While that would be a record crop, the estimate is down from the USDA's projection of 13.37 billion bushels a month ago.
Heavy August rains in parts of the Midwest caused crops to deteriorate, prompting the USDA to trim its average U.S. corn yield projection to 162.5 bushels an acre from 165 bushels. In Iowa, the top corn producer, excessive rainfall early in the month "left many low-lying fields completely saturated, stunting growth and yellowing portions of the crop," the USDA said.
Here is the latest Crop Progress report released by the USDA this week.
Tightening corn supplies and higher prices present a growing concern for livestock producers, analysts say. Further gains in corn prices may jeopardize producers' recent return to profit after at least two years of losses stemming from high feed costs and low milk prices.
An increase of another 25 cents or so in corn "puts (livestock producers) in a lot more difficult position," says Brian Basting, an analyst with Advance Trading Inc. "Profitability is coming back, but I don't think they could handle another surge" in corn.
Farm prices for corn are expected to average $4 to $4.80 a bushel in 2010-11, up from a previous forecast of $3.50 to $4.10, the USDA said.
Meanwhile, the USDA has raised its estimate of the U.S. soybean crop to 3.48 billion bushels, a record, from 3.36 billion in an August report.