WEST LAFAYETTE, Ind. — The USDA’s September crop production report contained bad news for Hoosier growers and livestock producers, and consumers nationwide, a Purdue University agricultural economist said last week. Corn production nationwide is expected to be down 3 percent from August numbers, while soybean production is forecast to be up 1 percent, the USDA reported.

Total corn production is forecast to be down from last month’s estimates in all states in the Farm World coverage area except Michigan and Tennessee, the report noted. They are also the only states in this area to see projected yields up from the August numbers.

“At 145 (bushels an acre), Indiana farmers will see the worst yield in the Corn Belt,” said Corinne Alexander, an associate professor in Purdue’s Department of Agricultural Economics. “There may tend to be more pessimism in Indiana. This is about as bad as it gets.”

Nationwide corn production is estimated to be nearly 12.5 billion bushels, down from the August forecast of 12.9 billion but up slightly from last year’s 12.4 billion. Average yields are expected to be 148.1 bushels an acre, down almost 5 from the August report. Last year, average corn yields were 152.8 bushels.

If the estimates hold, it will be the third largest production total on record in the United States, but the lowest average yield since 2005, the USDA noted. The report, from the USDA’s National Agricultural Statistics Service (NASS), was released Sept. 12.

Soybean production nationwide is estimated at 3.09 billion bushels, up from the August estimate of 3.06 billion, but down 7 percent from last year’s 3.3 billion. Average yields are projected to be 41.8 bushels per acre, up slightly from last month’s 41.4. Last year’s average yield was 43.5 bushels.

Michigan is the only state in this area expected to see an increase in soybean production and yield, the report stated. Production and yield numbers in Illinois are projected to stay the same.

The report’s numbers weren’t a surprise because many analysts thought the August projections were too high, Alexander explained. “People were looking at the 147 to 148 range (for corn), so the forecast is in line with expectations. I think maybe some people had been expecting 147,” she added.

Exports, livestock use falling?

While the amount of corn available could drop more than 400 million bushels, the USDA has also reduced its corn usage estimates by about the same amount, Alexander noted. The agency is projecting the livestock industry will decrease its usage by 200 million bushels. Exports and ethanol usage are expected to decrease by 100 million bushels each. “If the corn isn’t available, you can’t use it, but there is still very strong demand in all these areas,” she noted. “We know usage has to be reduced, but anytime we have to ration, it means higher prices.”

Livestock producers looking at higher corn prices may turn to wheat to feed their animals, she said. Usage reductions will probably begin when corn reaches $8, she added.

“With tight supplies, it’s going to be very tough for livestock producers,” she explained. “There’s a pretty major concern about how they’re going to fare.”

It’s too soon to predict if the U.S., the world’s largest corn exporter, could lose some of its overseas markets, Alexander stated. “The loss (of U.S. corn) will be made up with corn exports from other countries. With corn prices this high, a lot of countries around the world will be incentivized to grow corn. We’re looking at a new record price globally for corn.”

The record high prices are at least partially to blame for the USDA’s projected drop in demand by more than 400 million bushels, noted Jon Cavanaugh, market analyst for Central States Enterprises in New Haven, Ind.

“Exports are falling way short of estimates, and with feed usage, livestock producers, especially those in poultry, are cutting back as much as possible. Maybe we’ve already gone far enough on corn prices,” he said.

The U.S. is facing more competition for its products worldwide, and high corn prices have forced some nations to look to other feeding options for their livestock, he explained.

Eastern Europe is becoming a major exporter of wheat, which is less expensive than U.S. corn.

“The U.S. is still the world’s principal corn exporter and producer, but given the prices, it makes sense to feed and grow wheat instead,” Cavanaugh said.

There are several uncertainties in the global market, including the credit situation in Europe, he added. “If there are collapses in the credit markets there, there would be concern over the reduction in demand for commodities around the world. There’s also confusion over what China might do. There are indications China may buy large amounts of corn from the U.S., but now the prices are too high. They could become a buyer, but we don’t know.”