A midsummer heat wave did more damage to the U.S. corn crop than expected, the government said on Thursday, which will likely ratchet up the pressure on global food prices.
With the harvest only weeks away, the U.S. Agriculture Department estimated the corn crop at a barely adequate 12.914 billion bushels. It would be the third-largest crop on record but every bushel of it, and slightly more, will be consumed by next fall.
USDA's corn estimate was 1 percent smaller than traders expected. Its forecast for the soybean crop, 3.056 billion bushels, was 4 percent below trade expectations.
Futures prices were expected to rise, buoyed by prospects of tight supplies for at least a year to come.
"Obviously the yields were down and based on the weather to date we expect them to come down further," said Dan Basse of AgResource Co. "This is quite disappointing for the livestock industry and the ethanol industry but they are quite bullish reports."
Jack Scoville, analyst at The Price Group, said, "We have a rationing job ahead and we will keep prices high, no doubt about it."
USDA said a slowdown in exports and in corn use for ethanol will mean a larger corn stockpile at the Aug. 31 end of this marketing year -- 940 million bushels compared to trade expectations of 922 million bushels.
The corn stockpile will shrink to 714 million bushels before the next harvest, 5 percent below trade expectations and the smallest end stocks in 16 years -- and that would be after cutbacks in exports and less use for livestock feed and for making fuel ethanol.
Overall, U.S. corn usage in the new marketing year would be 2.5 percent smaller than expected a month ago. Corn for ethanol would drop by 50 million bushels, or 1 percent, due to tighter supplies and lower forecast gasoline consumption this year and in 2012, said USDA.
Soybean production is lower than expected due in part to rains and flooding in the northern Plains that reduced plantings by 500,000 acres. Yield would be 3 percent lower than expected by traders.
USDA lowered its forecasts of U.S. wheat, corn and soybean exports in the coming year and pointed to rising global end stocks for the three crops.
Planting ran so far behind normal in the northern Plains that USDA conducted a special survey last month to get a clear picture of wheat, corn and soybean seeding in the region. Besides the small reduction in soybean plantings, it showed durum wheat seeding was down 15 percent and other spring wheat down by 7 percent from earlier reports.
Bad weather scarred crops from the start. A cold, rainy spring delayed planting and spawned floods in the Midwest and Mississippi River valley. Drought baked the southern and central Plains.
USDA says there is a 10.3 percent margin of error for its estimate of the corn crop and an 11.5 percent margin for soybeans. In the past 20 years, the corn estimate was smaller than the actual crop 12 times. Soybeans had the same record.
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