WASHINGTON, D.C. – Due to a hot, dry summer over much of the Corn Belt, farmers were expecting the Agriculture Department to show a big drop in its estimate for the nation’s corn crop in its September Crop Production report released and that’s just what happened.
In its latest forecast, USDA pegged the U.S. corn crop at just shy of 12.5 billion bushels, down 3 percent from its August estimate. USDA is estimating yields to average 148.1 bushels per acre, down 4.9 bushels from its August projection. If realized, this would be the lowest average yield in the United States since 2005.
“Due to excessive heat during pollination for most of the nation’s corn crop, everyone was expecting USDA to reduce its average corn yield in the September crop report from its August estimate,” explained Todd Davis, crops economist with the American Farm Bureau Federation. “The average yield of 148.1 bushels per acre is pretty much what analysts were expecting. The theme of this marketing-year hasn’t changed. We still have a very tight corn crop this year.”
While USDA is forecasting a drop in supply, it is also projecting a drop in demand for exports, ethanol use and feed use. Still, Davis cautions that supplies are very tight and demand remains strong.
“If we have any more weather difficulties, this crop might get even smaller. We still need every bushel we can harvest this year,” Davis said. “USDA’s October crop will also be important because that’s when adjustments to harvested acreage will be made. We could see a drop in harvested acres, which would make an already tight supply situation even tighter.”
Davis said higher prices are having the expected impact of lowering demand. In its September report, USDA reduced corn exports by 100 million bushels from August, cut feed and residual demand by 200 million bushels and slashed ethanol demand by 200 million bushels.
“The drop in ethanol demand is not surprising. Demand for gasoline is down now that the busy summer driving season is coming to an end,” Davis said. “Because of high corn prices and lower demand for ethanol, profit margins for ethanol producers will be very tight.”