UIUC Weekly Outlook: Smaller Corn Crop Confirmed

For the United States, the projection of food use of wheat during the current marketing year was reduced by 5 million bushels, and the projection of exports was reduced by 75 million bushels.

Year-ending stocks are projected at 761 million bushels, 90 million larger than projected last month, but 100 million smaller than stocks at the start of the year. The 2011-12 marketing year average farm price is projected in a range of $7.35 to $8.35, well above the $5.70 average of the previous year, the expert said.

"Taken together, the September USDA reports are negative for near-term soybean and wheat price prospects. Many observers, however, believe the soybean production forecast will be reduced in October," he said.

Good said that the reports were generally supportive for corn prices. Some analysts interpreted the USDA's sharp reduction in the forecast of corn consumption as a sign of significant demand weakness, he said.

"The reduction, however, was more a statement of availability. Some corn demand weakness is anticipated in 2012, but for now, prices will have to stay high in order to trim consumption. There is also some expectation that the October production forecast will be slightly smaller than the September forecast," he said.