Record Corn Crop Expected

Despite Struggles, Record Corn Crop Expected
By Renewable Fuels Association

(September 10, 2010) Washington – Given weather challenges late in the growing season, USDA today slightly lowered its prediction for the size of the 2010 corn crop. According to USDA, American farmers are expected to produce 13.16 billion bushels of corn, which would still be an all-time record. The average yield estimate was lowered slightly to 162.5 bushels per acre, the second highest yield average in history.

On the demand side, USDA lowered total 2010/11 corn demand by 50 million bushels, keeping ethanol demand steady at 4.7 billion gross bushels for the marketing year. Total domestic corn use is virtually unchanged from last year.

As discussed by RFA’s Vice President of Research and Analysis Geoff Cooper in this blog post , changes in this latest USDA report were expected and speculators have been placing big bets that the crop won’t live up to previous expectations. The run-up in corn prices prior to the release of this morning’s report was spurred largely by the reappearance of large index and hedge funds in the corn market. “The recent flurry of activity in the corn market is undoubtedly being driven by the resurgence of speculators. Hedge and index funds are descending on the corn market in numbers not seen since the spectacular commodities bubble of 2008,” Cooper wrote. “The movements of the market become sufficiently more exaggerated when this many speculators are in the game. The highs are higher, the lows are lower, and everything happens faster.”

But despite USDA’s adjustments in this morning’s report, expected global grain ending stocks remain at one of their highest levels in the past 10 years. “Worldwide grain supplies remain strong and US grain production is expected to be ample to meet demand,” said Cooper. “American farmers have routinely proven their ability to produce enough grain to meet increasing demands, even in adverse and unfavorable growing conditions. As we have seen repeatedly in recent years, advancements in farming practices and technologies are allowing farmers to meet all demands for food, feed, and fuel.”


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