USDA Raises 2009 US Corn Production Forecast

The U.S. Department of Agriculture, after revising its June 30 corn planting estimate, said Wednesday it has raised its forecast for corn production this year.

U.S. farmers are now forecast to produce 12.761 billion bushels of corn in 2009, up from the USDA’s July prediction of 12.29 billion bushels.

The corn production forecast was increased “as higher forecast yields more than offset a small reduction in harvested area,” the USDA said in its August edition of the World Agricultural Supply and Demand Estimates report.

The new national average yield forecast is 159.5 bushels per acre, up from the July prediction of 153.4 bushels.

“Forecasted yields are higher than last year across the Central Plains and western corn belt where mild temperatures and adequate soil moisture supplies provided favorable growing conditions,” the USDA said in its Crop Production report, which was also released Wednesday. “Expected yields were also higher across much of the
Ohio and Tennessee valleys and Atlantic Coast where beneficial moisture this year contrasted with exceptionally dry conditions last year.”

A higher production forecast, tempered by expectations for increased domestic corn consumption, figured into the USDA’s calculation of higher ending stocks for the 2009-10 corn marketing year. The new carryout forecast is 1.621 billion bushels, up from the July prediction of 1.55 billion bushels.

Domestic corn usage will be higher than expected despite less demand for feed from livestock producers, the USDA said. One of the increases in demand is seen coming from ethanol producers.

The domestic usage forecast was raised because of “higher expected use for ethanol supported by favorable ethanol producer returns and strong incentives for ethanol blending,” the USDA said.

The USDA raised its forecast for corn usage by the ethanol industry in the 2009-10 marketing year to 4.2 billion bushels, up from a previous prediction of 4.1 billion bushels.

Source: CME Group