Whoops! USDA has to eat its optimistic projections from September 30 on corn crop and sets off commodity surge
It looks like the U.S. Department of Agriculture has been completely wrong-footed by the U.S. corn crop. And that has sent agriculture stocks soaring today, October 8.
Just a few months ago the USDA was projecting a record crop. Just a couple of weeks ago on September 30, the agency projected corn production of 13.16 billion bushels on a near record yield of 162.5 bushels an acre.
On October 8 shockingly lower projections completely reversed the shocking higher estimates issued by the USDA on September 30.
The USDA is now projecting final corn production of 12.664 billion bushels and a yield of 155.8 bushels per acre. Analysts have been arguing that September’s USDA projections were too high given conditions in the field, but even those analysts were projecting a yield of 159.9 bushels per acre. Last year set a record yield at 164.7 bushels an acre.
The revisions to the supply/demand picture were big enough to move the commodity and stock markets. The USDA is now calling for an end of the year corn inventory of just 902 million bushels. That more than 19% below the September estimate of 1.116 billion bushels for year-end inventory. Ending corn inventory for 2009-2010 stood at 1.6708 billion bushels.
Stocks moving up on the news include Mosaic (MOS) and Agrium (AGU) in the fertilizer group, seed companies Monsanto (MON) and Syngenta (SYT) and farm equipment makers Deere (DE) and AGCO (AGCO).
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This is an excellent corn crop here in Iowa, it may have been a record crop, if not for low land flooding.
MOS and AGU shares have run away from me, I’m afraid …
Wait till the December USDA report, they will adjust it and it retreat back
I am getting hungry but price inflation keeps me in that state. Oh well I at least may not need to worry about the bone head ethanol movement. Natural Gas is still cheap.
A lot of corn and soybeans are grown here in Maryland and elsewhere on the east coast. With the drought of this past summer crop yields are running about 50% less than last year. Additional damage has been done to the crops by a new import from China – hungry stink bugs. And the other Chinese import, voracious tiger mosquitoes don’t make it any easier to work in the fields either. They are 24/7 blood suckers.
off topic.
http://www.ft.com/cms/s/0/e66c3a8a-d559-11df-8e86-00144feabdc0.html
Jim,
I will not eat my words! Respecfully, if you re-examine the record, I’ve made it clear that I am a food commodity bull. My investments (which I’ve recommended here) in DE and DD (doing very well) and MON (ouch – too early) reflect my position on the matter.
On a serious note, you didn’t mention the Russian drought and wheat production slump / export ban. This has helped to drive up the price of wheat. Corn, as an alternative grain to wheat, was pulled higher as well.