USDA erased 46mmt from the corn balance sheet overnight. That is one and a half complete Australian crops. A very major deal and very bullish for agricultural stocks moving forward as higher prices allow farmers to target increased production to capture prices in 2013.
There is no other sector primed to perform left in the global economy apart from debt collection.
--------------------------------------------------------- Drought slashes US corn estimate Peter Hemphill | July 12, 2012
Belted: Drought-stricken corn is seen on Steve Niedbalski's farm before it is chopped down for feed in Nashville, Illinois this week. Farmers in parts of the Midwest are dealing with the worst drought in nearly 25 years
THE US Department of Agriculture has wiped 46.2 million tonnes off its forecast of US corn production.
Drought in the corn belt prompted the USDA to slash the average crop production from 166 bushels an acre forecast in May to 146 bu/ac in this month’s World Agricultural Supply and Demand Estimates, in line with market expectations.
Corn futures prices on the Chicago Board of Trade ended trading after the release of the WASDE report 2 per cent lower at US704 cents/bu, or $A272 a tonne.
The market had already factored in a huge adjustment to the USDA corn estimate figures.
Some market analysts had previously estimated corn crop yields could fall as low as 140 bu/ac as a result of the worsening drought.
The USDA had wiped 19.2 million tonnes off its June forecast of domestic consumption of corn to 282.5 million tonnes and reduced its estimate of exports from 48.3 million tonnes last month to 40.6 million tonnes this month.
Corn stocks were estimated to end the season at 30.1 million tonnes, well below the previous month’s forecast of 47.8 million tonnes.
Ending stocks for 2012-13 are still higher than the past two seasons but the stocks to use ratio is approaching levels where corn will again drive the wheat market.
The USDA reduced its forecast of world wheat production by 6.7 million tonnes to 665.3 million tonnes.
It wiped four million tonnes off the Russian crop, two million tonnes off Kazakhstan’s production and two million tonnes from the Chinese crop.
These were offset by a 2.1 million tonne increase in the European Union’s wheat crop.
Australian production for this season has been left unchanged at 26 million tonnes.
The latest WASDE report also shows American farmers have planted the largest area to the eight most popular crops – wheat, corn, soyabeans, sorghum, barley, oats, rice and cotton – since 1997-98.
