The U.S. corn crop will be 3.8 percent smaller than forecast a month ago, the government said, after flooding in June and hot, dry weather in August cut Midwest yields.
Production will total 12.664 billion bushels, down from 13.16 billion projected a month ago and less than last year’s record 13.11 billion, the U.S. Department of Agriculture said today in a report. The average estimate of 26 analysts surveyed by Bloomberg News was for 12.977 billion bushels.
“We will not produce enough to meet demand from domestic livestock producers, ethanol makers and overseas buyers,” Alan Brugler, the president of Brugler Marketing & Management Inc. in Omaha, Nebraska, said before the report. “We are going to run up the price to slow demand and encourage farmers to plant more next year.”
The report was released before the start of trading on the Chicago Board of Trade, where corn futures for December delivery rose 9.75 cents, or 2 percent, to $4.9825 a bushel yesterday. The most-active contract has surged 41 percent since June 1 as adverse weather damaged crops.
Today’s estimate is the third for this year’s crop based on farmer questionnaires and a survey of 1,920 field.
Reduced supplies of corn may increase expenses for meat companies such as Tyson Foods Inc. and Smithfield Foods Inc. Makers of corn-based ethanol such as Valero Energy Corp., Poet LLC and Archer Daniels Midland Co. may see margins squeezed.
Rain, Heat Damage
Parts of the Midwest received the most rain in June since 1960, damaging root development and yield potential, said Mike Tannura, the president of T-Storm Weather LLC in Chicago. In July and August, temperatures in Iowa, Illinois and Indiana were the fifth-warmest since 1960, restricting movement of sugars and starch into kernels, he said.
The USDA cut its yield forecast to 155.8 bushels per acre from 162.5 bushels estimated last month. Last year’s average yield was a record 164.7 bushels and analysts were expecting 160.2 bushels, on average.
Farmers will harvest 81.263 million acres this year, the USDA predicted, up from 81.005 million estimated a month ago.
The USDA said 88.2 million acres were planted with corn, up from a June estimate of 87.872 million and more than 86.482 million sown a year earlier. For the October production report, the department typically incorporates acreage figures from its Farm Service Agency, which gathers data from farmers at the county level.
Unsold U.S. supplies on Sept. 1, 2011, before next year’s harvest, will total 902 million bushels, compared with the month-ago forecast of 1.116 billion and 1.708 billion this year, the USDA said. Analysts expect reserves of 1.15 billion bushels.
Cash prices in the U.S. will average $5 a bushel for this crop year, compared with $4.40 estimated in September and $3.55 in the previous year.
World production in the year that began Oct. 1 will be a record 819.7 million metric tons, down from the month-ago forecast for 826.1 million and down from an estimated 810.3 million tons in the previous year.
Production in China, the biggest producer and consumer after the U.S., will total 166 million tons, unchanged from last month and up from 155 million last year, the USDA said. The Asian nation was forecast to import 1 million tons, unchanged from last month.
Global consumption is forecast at 835.4 million tons, up from 829.5 million tons projected in September and up from 810.2 million last year.
Inventories before next year’s Northern Hemisphere harvests will total 132.4 million tons, down from 135.6 million tons predicted a month ago, and less than the 148.1 million estimated for a year earlier, the USDA said.
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