The markets had been waiting on the latest USDA National Agricultural Statistics Service Crop Production report and quickly responded to lower crop production levels.The grain markets were higher right out of the gate following the release of the report, but corn and wheat suffered from profit taking later in the day.
As of Nov. 1, U. S. corn production is forecast at 12.5 billion bushels, down 1% from the October forecast and down 4% from last year’s record production of 13.1 billion bushels. Yields are expected to average 154.3 bushels per acre, down 1.5 bushels from the previous month and 10.4 bushels below last year’s record of 164.7 bushels.
U.S. soybean production is forecast at a record high 3.38 billion bushels, down 1% from the October forecast but up slightly from last year. Based on Nov. 1 conditions, yields are expected to average 43.9 bushels per acre, down 0.5 bushel from last month and down 0.1 bushel from last year’s record high yield.
Ohio’s average corn yield is forecast at 165 bushels per acre, down 2 bushels from the previous month’s forecast and 9 bushels below the 2009 average yield. Total grain production is forecast at 541.2 million bushels, down 1% from last year’s State total. Corn growers expect to harvest 3.28 million acres in 2010 up 140,000 acres from one year ago.
The 2010 average soybean yield for Ohio is forecast at 48 bushels per acre, unchanged from last month’s forecast and 1 bushel below the 2009 average state yield. Total state production is forecast at 224.64 million bushels, up 1% from 2009. Harvested acreage is forecast at 4.68 million acres, up 150,000 acres from last year.
The 2010 U.S. corn crop is still on track to compete with previous years with both yield and production forecast to be the third-highest on record according to the National Corn Growers Association. With a projected surplus of 827 million bushels, this crop demonstrates that U.S. corn farmers will continue to meet all demands for food, feed, fuel and fiber.
“The marketplace generally responds well to these temporary challenges,” said Steve Ebke, National Corn Growers Association Production and Stewardship Action Team Chair. “With higher grain prices, southern hemisphere corn growers will respond to market signals with the crop they deliver in six months. Likewise, we anticipate U.S. farmers will invest in higher production next year.”
While the 2010 harvest projections continue to decline, the crop forecast remains strong and supplies will meet demand without significantly impacting consumer food prices. In late August, the USDA reported that food price increases in 2010 will be minimal. The Consumer Price Index for all food increased 1.8% in 2009 and is forecast to increase 0.5 to 1.5% in 2010 — the lowest increase since 1992.
Recent reports also indicate that increased ethanol production will not cause food prices to rise substantially. In a July 2010 report, the World Bank stated that “the effect of biofuels on food prices has not been as large as originally thought, but that the use of commodities by financial investors may have been partly responsible for the 2007-08 spike.”
International studies further supported this claim. The United Kingdom’s Department for Environment, Food and Rural Affairs issued a report in March 2010 that discounted biofuels impact, stating “Available evidence suggests that biofuels had a relatively small contribution to the 2008 spike in agricultural commodity prices. Studies which have found a large biofuel impact across agricultural commodities have often considered too few variables, relied on statistical associations or made unrealistic or inconsistent assumptions.”
Distillers grains, an ethanol co-product used as a high-protein feed ingredient, continue to offset increased ethanol demand for corn as they supply the livestock market with quality nutrition in an affordable manner. For the first time, distillers grains availability will displace more than 1 billion bushels of corn in domestic livestock rations this marketing year further decreasing demand for the near record supply.