Houston, 12 September (Argus) — Devastating drought across the US midcontinent has both cut corn production for the current growing season and left more of the grain in storage – at least for now.
The US Department of Agriculture (USDA) trimmed 52mn bushels from its expected US corn harvest, now forecasting 10.727bn bushels in the latest World Agriculture Supply and Demand Estimates report. Yield on a per harvested acre fell by 0.6 bushels/acre to 122.8 bushels/acre compared to last month's report. US ethanol demand for corn as feedstock remained at 4.5bn bushels, while livestock demand and waste increased 75mn bushels to 4.150bn bushels when compared with the August report.
But the country's beginning stocks — carryover old corn from prior harvests — increased 160mn bushels, lifting total US supply by 108mn bushels to 11.983bn bushels, the USDA said. An early harvest of 1.2bn bushels was helping to keep old corn in storage longer than previously forecast.
“There's a lot of the corn crop, an unprecedentedly large amount of the corn crop that has been harvested before the beginning of the marketing year,” USDA economist Ed Allen said.
Dismal conditions in some states, including Missouri, Kansas and Kentucky, have led to the earliest harvest on record. Missouri had harvested 53pc of its crop as of 6 September after enduring some of the worst drought conditions of the corn belt. The five-year average for completed harvest during the same week of prior years was just 15pc.
That meant more corn available at a lower price for customers close enough to access the Missouri crop.
“If you're an ethanol plant in Missouri, rather than haul old crop in from some location farther away, you're going to use the new crop nearby,” Allen said.
The agency also slightly reduced its price expectations for the grain, forecasting a range of $7.20-$8.60 per bushel in September, down from earlier forecasts of $7.50-$8.90 per bushel, according to this morning's report.
Crop expectations have pressured the ethanol industry as livestock groups fret over feed supply and others raise the specter of higher food prices. The Renewable Fuels Association (RFA), an ethanol lobbygin group, quickly touted the expected harvest as the eighth-largest US corn crop on record, and said corn yield projections bested analyst expectations of 120.5 bushels/acre. The industry has argued livestock producers will ultimately account for 46pc of corn supply, based on the sale of distillers grains, an ethanol byproduct used as cattle feed, to feedlots.
“This morning's report also clearly shows that all end users are sharing in the pain and participating in demand rationing,” RFA president Bob Dinneen said.
“The notion that the ethanol industry is somehow insulated from demand rationing because of the RFS is shown to be patently false,” he said, referring to the Renewable Fuel Standard that mandates certain volumes of biofuels be blended into the nation's transportation fuel pool.
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