Lower corn, soybean yields projected, prices to remain high

The U.S. Department of Agriculture on Wednesday said Iowa's corn and soybean crop yields will be sharply lower than 2011 due to the drought.

But corn supplies will be slightly higher due to lower demand for exports and livestock feed.

The USDA said corn prices are expected to stay between $7.20 and $8.60 per bushel and soybeans prices will remain in the range of $15 to $17 per bushel.

Iowa's corn crop is projected to yield an average 140 bushels per acre, down 32 bushels from 2011 and a bushel below the Aug. 1 forecast. Corn production is forecast at 1.9 billion bushels, 19 percent below the 2011 production and nearly 1 percent below the August forecast.

Corn acres planted and harvested for grain remained unchanged at 14 million and 13.6 million acres, respectively.

Iowa's soybean yield forecast of 39 bushels per acre is down 4 bushels from the Aug. 1 forecast. If realized, the state's soybean production would be 368 million bushels, down 21 percent from last year's 466 million bushels.

Iowa's 1,512 soybean pods with beans per 18 square feet is the lowest count at this point in the season since 1993 when there were 1,336 soybean pods with beans per 18 square feet.

Nationally, corn yields are expected to average 122.8 bushels per acre, down less than a bushel from the August forecast and 24.4 bushels below the 2011 average. If realized, it will be the lowest average yield since 1995.

Corn production is forecast at 10.7 billion bushels, down less than 1 percent from the August forecast and down 13 percent from 2011. If realized, it will be the lowest corn production in the United States since 2006.

Soybean production nationally is forecast at 2.63 billion bushels, down 2 percent from August and down 14 percent from last year. Based on Sept. 1 conditions, yields are expected to average 35.3 bushels per acre, down slightly less than a bushel from last month and down 6.2 bushels from last year.

The USDA said soybean yield forecasts are lower or unchanged across the Great Plains and most of the Corn Belt as lingering drought conditions continued to hamper yield expectations.

Nearly 11 percent of the nation's corn crop was harvested by Sept. 1 due to the dry weather and maturing of the crop ahead of schedule. Jim Nemitz of Midwest Strategic Investments in Cedar Rapids said producers from Indiana to Nebraska earlier this week reported yields ranging from 25 bushels to 198 bushels per acre.

"Keep in mind that the numbers we saw today were only as of Sept. 1," Nemitz said. "We've gotten a lot of stuff done since then.

"I think we're going to continue to leak in the corn market because we're hearing yields that are all over the board. I think the USDA was very conservative with its estimate of the corn crop.

"I'm more surprised by the bean yield number, which was lower than the average yield estimate due to the August rains and temperatures when soybeans are typically made."

Don Roose of U.S. Commodities said the USDA is projecting corn supplies 108 million bushels higher for 2012-2013 as an increase in beginning stocks is expected to offset lower production.

"The ending stocks on old crop corn have ballooned all the way up to almost 1.2 billion bushels, which by any measure is a comfortable number," Roose said. "The government has reduced export estimates by 10 million bushels and took the amount of corn used for livestock feed down by 150 million bushels."

Nemitz and Roose said the October USDA crop production and yield report will provide a more accurate estimate of corn and soybeans because it will reflect actual numbers as opposed to projections.