The nation’s winter wheat crop is expected to be the lowest since 2006 after dry conditions hampered development, though this year’s corn harvest is on track to be the largest ever after farmers hiked acreage, the U.S. Department of Agriculture said.
Farmers will harvest an estimated 13.51 billion bushels of corn in 2011, up 8.5 percent from 12.45 billion bushels in 2010, the USDA said in its monthly Supply and Demand report May 11. Projected average corn yields, at 158.7 bushels an acre, would be the third-highest on record.
In a separate report, the USDA forecast 2011 winter wheat production at 1.42 billion bushels, down 4.1 percent from 2010 and the smallest since 1.29 billion bushels in 2006. Dry weather in the major wheat areas of the Southern Plains led to poor growing conditions, the USDA said.
Analysts and traders deemed the USDA reports bearish for grain prices, with the strong production outlook expected to ease strain on tight stockpiles. Still, livestock feeders and other users of the grain are expected to pay historically high prices for the grain into 2012.
Corn and soybean futures at CME Group are expected to open 20 cents to 30 cents lower on May 11, while wheat futures are expected to open 10 cents to 20 cents lower.
The USDA unexpectedly boosted its forecast for corn supplies, reflecting lower exports.
U.S. corn stocks at the end of the 2010-11 marketing year Aug. 31 will total 730 million bushels, up from an estimated 675 million bushels a month ago but still down 57 percent from 2009-10 ending stockpiles.
Still, corn supplies “remain historically tight” with stocks as a percentage of use estimated at 5.4 percent at the end of 2010-11 and 6.7 percent for 2011-12. Average farm prices for corn will range from $5.50 to $6.50 a bushel next year, up from $5.10 to $5.40 this year, the USDA projected.