USDA revises crop estimates dramatically lower

The U.S. Department of Agriculture (USDA) gave its assessment of the historic drought Friday, forecasting national corn production at 10.8 billion bushels, down 13% from 2011 and the lowest production since 2006.

The report is the USDA’s first official assessment of the impact of the drought that has hit the Corn Belt and is considered to be the worst since 1956.

The government report said corn prices, which already have reached record levels above $8 per bushel in the last month, could go to as high as $8.90 per bushel, well above $6.40 per bushel projected in July and $4.80 per bushel projected in April at planting time.

U.S. corn production for 2012-2013 is forecast at 10.8 billion bushels, lowest since 2006-2007. Surplus corn stocks going past the upcoming harvest into 2013 are projected at 650 million bushels, 533 million lower, down from 1.18 billion bushels forecast a month ago and the smallest carryout since 1995-1996.

The USDA yield and production forecasts are drastic. The USDA said total corn use is projected 1.5 billion bushels lower and at 11.2 billion would be a 6-year low.

The USDA said feed grain supplies will be 2.2 billion bushels lower than earlier projections, as livestock producers reduce their herds in the face of higher feed costs. That reduction of herds, in turn, is expected to drive up meat prices next year.

The USDA predicts a 400 million bushel reduction in the demand for ethanol, which now consumes almost 40% of the U.S. corn crop. The Des Moines Register

FACTS & FIGURES

Global alarm over a potential repeat of the 2008 food crisis escalated after data showed food prices had jumped 6 percent last month and importers were snapping up a shriveled U.S. grain crop, helping drive corn prices to a new record. TVNZ

A mix of high oil prices, growing use of biofuels, bad weather, soaring grain futures markets and restrictive export policies pushed up prices of food in 2007/08, sparking violent protests in countries including Egypt, Cameroon and Haiti. TVNZ

The FAO Food Price Index, which measures monthly global price changes for a food basket of cereals, oilseeds, dairy, meat and sugar, averaged 213 points in July, up 6 percent from 201 points in June, the FAO said in its monthly update. Reuters

July of 2012 was the hottest month in the 118 years of American history in which the federal government has been keeping records, according to the National Oceanic and Atmospheric Administration. Seattlepi.com

SOURCE

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