DES MOINES, Iowa – The U.S. Department of Agriculture on Thursday slightly lowered its projection for the nation's corn crop for a fourth straight month, reflecting worse-than-expected news about the actual impact of this year's withering drought from the farmers busy harvesting their fields.
The USDA estimates that farmers will harvest 10.71 billion bushels of corn this year, which would be the smallest amount since 2006. Last month's estimate was 10.73 billion bushels.
Crop estimates change as fields are harvested and farmers get a better sense of how the weather affected yields. The U.S. has been experiencing one of its worst droughts in decades, and conditions have been particularly harsh in many of the key Midwest and Plains farming states.
Farmers have harvested 69 percent of the nation's corn already this year, which is well ahead of the 28 percent that would be harvested by this time in a typical year.
The average yield is about 122 bushels per acre, which is down from last month's estimate of 122.8 bushels. That is the lowest average yield since 1995 and is significantly below last year's yield of nearly 153 bushels per acre. Although the drought dried up the soil in many parts of the U.S., the corn harvest was surprisingly good in some areas, said Darin Newsom, senior analyst for Telvent DTN, a commodity trading and information provider.
"Is 122 anything great? No. It's still a dismal yield, still well below what had been anticipated earlier this year," Newsom added.
In Iowa, for example, the nation's leading corn producer, production will be about 19 percent lower than last year at about 1.92 billion bushels. Neighboring Nebraska will see production down about 15 percent from last year at 1.3 billion bushels. Illinois was hard hit with production falling 37 percent to 1.22 billion bushels from last year and Indiana's slid 28 percent.
Minnesota corn farmers lucked out this year, getting at least some rain that helped avert the dire conditions further south. They saw a 15 percent increase in corn production to 1.39 billion bushels and an 8 percent yield increase to 168 bushels per acre from last year's 156 bushels.
Nationally, farmers planted more corn this year than in any other since 1937, so despite the widespread drought, the U.S. is expected to produce its eighth largest corn crop on record.
Farmers planted about 97 million acres in corn, which is far more than just a decade ago when fewer than 80 million acres were planted. They are expected to harvest about 88 million acres this year.
Corn supply is now estimated at 11.77 billion bushels, which is down from last month's estimate of 11.98 billion bushels.
The report is expected to boost prices for the next few days as the market reacts to the lower production and tighter supply estimates, but analysts expect a calming of the market now that the harvest is in its final stages and the drought impact is clear.
Corn for December delivery was trading at around $7.71 a bushel. It had hit a record high of $8.49 a bushel in August, but it has since settled down.
The USDA estimated the season average price for corn now at between $7.10 and $8.50 per bushel, about 10 cents lower on both ends of the range from its September estimate.
Still, prices at that level could have in impact on grocery bills, mostly meat and eggs since corn is used as a staple in chicken, cattle and pig feed.
Global supplies of corn remain tight and the major users – livestock farmers, the ethanol industry and other countries importing it – will be forced to negotiate their level of use, a sort of market rationing that takes place in years of low supply.
Soybean production was increased to 2.86 billion bushels as farmers harvest more acres and bring in better yields than had been expected earlier. Soybeans mature later in the growing season than corn and the plants withstood the drought better and some areas received rain in time to help the plants.
Harvested area was increased to 75.7 million acres from 74.6 million acres the month before. The soybean yield is projected at 37.8 bushels per acre, up from the previous month's estimate of 35.3 bushels.
Soybean supplies were increased 10 percent to 3.05 billion bushels.
"It's still not going to be enough. It's going to be a very tight situation," Newsom said.
Globally soybean demand remains high while supplies are inadequate to meet the level of demand, which likely will keep prices up.
Soybeans for November delivery hit a record high $17.89 in early September but settled down in recent weeks and were trading at $15.48 a bushel.