U.S. farmers can't meet booming corn demands
WASHINGTON (Reuters) - Exporters, livestock feeders and ethanol makers are going through the U.S. corn stockpile faster than farmers can grow the crops, the government said on Friday.
Despite record crops in two of the past three years and another record within reach this year, the Agriculture Department estimated the corn carryover will shrink to the lowest level since 2006/07.
In a monthly look at crop supply and usage, USDA estimated 1.478 billion bushels of corn will be in U.S. bins on August 31, when this marketing year ends, and 1.373 billion bushels will be on hand at the end of 2010/11.
The carryover figures are sharply lower from USDA's previous estimates -- down 8 percent for this year and down 12 percent for next year -- but slightly larger than traders expected.
"The number is definitely a negative, when you look at the carryout numbers," said Don Roose, analyst with U.S. Commodities in West Des Moines, Iowa.
The report was anticlimactic after USDA last week shocked markets with data that showed corn plantings were smaller than expected this year and corn consumption through June 1 was far larger than expected.
That data had spurred U.S. corn futures up 16 percent to a two-month high but prices are still far below 2010's peak above $4.25 a bushel seen in early January.
Wheat futures fell 2 percent on Friday, weighed by USDA estimates of a 2.2 billion-bushel U.S. crop, up 7 percent from its previous estimate and a surplus equal to six months' use. Wheat for September delivery ended the day at the Chicago Board of Trade at $5.38 a bushel, down 2 percent.
August soybeans rose 1 percent for the day, closing at $9.93-1/4 a bushel. September corn ended at $3.83-1/2, down 2 cents a bushel.
Some traders say the 2009 crop is overstated at a record 13.11 billion bushels and that livestock feed use of corn may not be as high as the June 30 report suggested. Analysts say a variety of explanations are possible, from an improperly high estimate of corn usage as of June 1 to a delayed recognition of shrinkage due to poor-quality corn.
"There will probably never be a known 'right' answer to this question, but we'll all keep looking for clues," said Pat Westhoff at a University of Missouri think-tank.
In its update, USDA raised its estimate of corn consumed as livestock feed by 175 million bushels, to 5.525 billion bushels but shaved 50 million bushels from corn-for-ethanol, due to a wobble in ethanol output.
Along with a smaller carryover supply this year, USDA trimmed its estimate of the corn crop by 125 million bushels, to 13.245 billion bushels -- still a record, due to smaller plantings. .
USDA raised its forecast of this year's wheat crop to 2.216 billion bushels, up 7 percent from June due to higher yields, and projected a cotton crop of 18.3 million bales weighing 480 lbs (218 kg), up 10 percent on larger plantings overall and the best crop weather in the Southwest since 1994/95.
USDA will make its first estimates of the fall harvest on August 12.
USDA says its corn crop projections are within 7 percent of the year-end figure, on average, but end-stock projections vary by as much as 35 percent from the final figure. Its winter wheat forecast has a margin of 7 percent.
(Additional reporting by Roberta Rampton, Christopher Doering and Jasmin Melvin in Washington and Sam Nelson in Chicago; Graphics by Jasmin Melvin; editing by Jim Marshall and Lisa Shumaker)
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