USDA Forecasts Record Corn, Bean Crops

US corn inventories will rebound from one of their lowest levels on record to one of the highest in 2013-14, as the harvest hits a record, but "strong foreign competition" limits exports. Perhaps this is the reason soybean prices appeared to top out today.
The US Department of Agriculture - in its first detailed forecasts for the domestic corn balance sheet in the forthcoming season - revealed it had factored a yield of 163.6 bushels per acre into its estimate revealed on Thursday of a record 14.35bn-bushel crop this year.
"Fall and winter dryness have little correlation with conditions during the following growing season and eventual yield outcomes," the USDA said, referring to, in some areas, the persistence of the 2012 drought which sent the yield to a 16-year low of 123.4 bushels per acre.
But use of the grain will not grow as strongly, enabling a recovery to 2.177bn bushels (55.3m tonnes) in stocks at the close of 2013-14, in August next year – more than three times the level at which they are expected to end this season.
Inventories at that level would represent the highest in 26 years – since the end of a late-1980s build in inventories which drove Chicago corn prices below $1.50 a bushel, a low not reached since.
USDA chief economist Joseph Glauber on Thursday forecast a sharp drop in prices in 2013-14, of one-third to $4.80 a bushel.
Economists at the U.S. Department of Agriculture, gazing into their crystal ball, see American farmers planting and harvesting huge amounts of corn, soybeans, and wheat this year. They're predicting a record harvest of corn: 14 billion bushels, up nearly 40 percent over last year's drought-crippled level.
With supply up, prices will fall. The USDA thinks that the price of the average bushel of corn could fall by a third. And soybean production and price are expected to follow a similar track.
Of course, these predictions assume good weather. USDA Chief Economist Joseph Glauber admits that he predicted the same thing last year at this time, but a drought in the Midwest turned anticipated glut into scarcity. Grain prices went up, putting a major squeeze on farmers who raise pigs, chickens, and cattle.
This week, the weather appears to be cooperating. As Glauber and his colleagues laid out their forecast in a Washington-area hotel, a storm was dumping more than a foot of snow on some of the places that needs it most, including Nebraska, Missouri, and South Dakota.