USDA cuts Iowa's corn crop estimate, no change for soybeans

The spring rains that have delayed corn planting in Iowa and across the Corn Belt to the latest date since the mid-1990s has prompted the U.S. Department of Agriculture to reduce its estimate for this year's crop.

Projected corn production was lowered 135 million bushels - to a record 14 billion bushels - with an average yield projected of 156.5 bushels per acre, down 1.5 bushels per acre from last month.

"Despite rapid planting progress during mid-May across the Corn Belt, rains and cool temperatures since have delayed the completion of planting in parts of the western Corn Belt," the USDA commented in its monthly World Agricultural Supply and Demand Estimates report.

The agency speculated the cool, wet weather has raised the likelihood that seasonally warmer temperatures and drier conditions in late July will adversely affect pollination and kernel set in a larger share of this year's crop.

With the reduced production prospects, the USDA projected the season-average farm price range for corn at $4.40 to $5.20 per bushel, up 10 cents on each end of the range.

Some grain market analysts interviewed by Reuters had expected the USDA to raise its soybean projection by 700,000 acres from May to signal a shift from corn to soybeans.

But the agency left its soybean supply and demand estimates unchanged, projecting the soybean crop would also set a record at 3.39 billion bushels. The USDA calculated the season-average price for soybeans at $9.75 to $11.75 per bushel, up 25 cents on both ends of the range.

Soybean imports were raised 5 million bushels to 25 million bushels based on relatively strong imports through April and expected additional gains through the end of the marketing year. The USDA reduced soybean exports by 20 million bushels to 1.33 billion bushels, reflecting exceptionally low shipments and sales in May and competition from Brazil.

Don Roose, president of U.S. Commodities in West Des Moines, said the USDA is trying to send a signal with Wednesday's report that the good areas of corn production will make up for the bad areas where yields will be sharply reduced.

"It's a long summer yet, and probably two-thirds of our corn crop is going to pollinate in the last two weeks of July," Roose said. "We're also going to see a lot of corn acreage planted late and will that beat the cold weather?"

Roose recalled the growing season of 1993 when heavy rains and flooding slowed corn and soybean planting.

"The market topped out right in the middle of the most severe weather and dropped through the rest of the summer," Roose said. "After the August crop report came out - and it will probably be the big one this year - the market finally started realizing that the crop wasn't there."

The USDA raised its projection for corn used in ethanol production by 50 million bushels. Roose said the increase reflects higher profitability for ethanol producers, prompting them to aggressively boost production of the biofuel.

"Use of ethanol is going to be a moving target because we're going to have 50 million to 100 million gallons of (ethanol) imports from South America starting in July," Roose said.

The monthly World Agricultural Supply and Demand Estimates report does not provide state-specific crop production estimates.