By ANN HINCH
Associate Editor

INDIANAPOLIS, Ind. — The USDA estimated last week that the U.S. corn harvest would be 12.91 billion bushels and national soybean production would top 3.06 billion bushels.

While this would be the third-largest corn harvest with the fourth-largest yield – at 153 bushels per acre – in U.S. history, those numbers are still lower than most analysts were expecting, according to Purdue University agricultural economist Chris Hurt. Coupled with news about low ending stocks of both, he noted, “We’re just basically running on empty on corn and soybeans.”
Futures on the Chicago Board of Trade (CBOT) reflected as much – December corn had risen from $6.88 at close on Aug. 10 to $7.14 a bushel at the end of Aug. 12, according to a preliminary CBOT market summary. November soybeans increased from $13.01 to $13.34, between the same dates.

The USDA’s Aug. 11 World Agricultural Supply and Demand Estimates report projects 2011-12 ending stocks of 714 million bushels of corn, which is 156 million fewer than the agency estimated last month – and nearly a billion bushels under inventory from two years ago, by comparison.

Soybean ending stocks are projected at 155 million bushels, 20 million fewer than the USDA anticipated in July (and slightly higher than two years ago, but significantly lower than 2010-11 stocks of 230 million).

Hurt explained annual inventories are measured at the end of August, just prior to harvest. Estimates, he said, reflect a 24-day supply of corn and 22 days of soybeans. He noted the ideal stocks would be a 45-day supply, perhaps even up to 60 days. He anticipates the situation will be much the same this time next year.

A federal mandate requires approximately 5 billion bushels of corn for ethanol production. Export demand for U.S. soybeans is still relatively high – even with record yields in Brazil last winter.
“This leaves the livestock sector to bear the brunt (of higher feed prices) here in the United States,” Hurt opined. (CBOT also showed increases in futures prices for live cattle and hogs between Aug. 10 and 12.)

The USDA report also noted a sharp reduction in U.S. sorghum yield, which is typically used for livestock feed, from nearly 72 bushels per acre last year to just under 55 bushels this season. This means national production will likely be down 30 percent from 2010.

Illinois is the only state in Farm World’s coverage area that grows a measurable amount of sorghum. Illinois farmers cut sorghum planting nearly in half this year.

Wheat sellers may benefit from decreased demand for corn for livestock. The USDA has jumped its 2011-12 average season price for wheat from a range of $6.60-$8 per bushel in July, to $7-$8.20 in this month’s report.

Nationally, all wheat production is down 6 percent from 2010, at 2.1 billion bushels for this year. Winter wheat, which is grown in this part of the country, makes up about 71 percent of that – and is actually up slightly from 2010, to nearly 1.5 billion bushels.
In the Midwest, Indiana jumped from 13.8 million to 24.6 million bushels; Illinois, from 16.5 million to 43.9 million; Michigan, from 35.7 million to 49.6 million; Ohio, from 45.8 million to 51.6 million; Kentucky, from 16.5 million to 28.7 million; and Tennessee, from 9.5 million to 21.7 million bushels.

Tough weather season

While forced late planting and record July heat has done its damage to corn, “there’s a real strong feeling that soybeans can still recover on yield,” Hurt said.

The USDA national yield estimate for soybeans stands at 41.4 bushels per acre, 2.1 lower than last year; for corn it’s at 153, which is lower than analysts expected but one-fifth a bushel more than last year.

Indiana farmers have had a particularly challenging season, noted Greg Preston, director for the state’s USDA National Agricultural Statistics Service office. Between only seven suitable planting days in April and being 20 days behind on corn planting by the end of May (and 17 days on soybeans), as well as July’s scorching heat, “We had a little bit of the worst of everything this year.”

The good news is this isn’t the slowest planting year on record; that would be 1961. The less positive news is the Indiana corn harvest is projected at 855 million bushels, down 43 million from 2010. Anticipated state soybean harvest is also down, from almost 259 million bushels last year to 227.5 million. “Everybody’s enjoying a pretty decent (corn) year out there,” Preston said, “except us.”

State soybean production, he noted, might help farmers recoup some financial losses from decreased corn. State Agriculture Director Joe Kelsay noted this would be particularly good news if corn prices dip as a result of high national harvest, since if that happens Hoosier growers would suffer twice: from the lower prices themselves, and from having less corn to sell.

He lamented Indiana’s bad luck with weather this summer. “Ohio, frankly, in the spring, was worse than us in trying to get the crop (planted),” he pointed out, referencing a much slighter decrease in anticipated corn for Indiana’s eastern neighbor than for this state.
Ohio farmers expect to harvest 524.6 million acres of corn this fall, down 8.4 million from 2010. Prospects for other Eastern Corn Belt states are up this year, with Iowa expecting 2.4 billion bushels; Illinois, 2.1 billion; Michigan, 319.5 million; Kentucky, 194.3 million; and Tennessee, 96.6 million.

Indiana growers will be down on soybean production, as noted above, but so are most other states surrounding it – Iowa projects a decreased harvest of 473.7 million bushels; Illinois, 424.8 million; Michigan, 79.5 million; and Ohio, 205.9 million. Kentucky, however, expects an increase from 47.3 million bushels in 2010 to 60 million, and Tennessee, from 43.7 million to 48.2 million.