NCC responds to USDA's corn production forecast

by Ron Sterk and Bryan Salvage
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WASHINGTON — U.S. 2010 corn production was forecast at 12,664 million bushels, down 4% from 13,160 million bushels forecast in September and down 3% from a record 13,110 million bushels in 2009, the US Department of Agriculture said in its Oct. 8 Crop Production report. Soybean production was forecast at a record 3,408 million bushels, down 2% from 3,483 million bushels forecast in September but up 1% from 3,359 million bushels last year.

The USDA corn production number was below the average pre-report trade estimate of 12,950 million bushels. The USDA soybean number also was below the trade average of 3,491 million bushels.

Based on Oct. 1 conditions, corn yield was forecast at 155.8 bus an acre, down 6.7 bus from the September forecast and 8.9 bushels below the 2009 record of 164.7 bushels an acre, the USDA said.

“Forecasted yields decreased from last month throughout much of the Corn Belt and Tennessee Valley,” the USDA said. “Illinois showed the largest decline, down 14 bushels per acre. Indiana and Iowa are both down 10 bushels from the previous month, while Missouri and Nebraska declined nine bushels per acre.”

Corn area harvested for grain in 2010 was forecast at 81.3 million acres, up slightly from September and up 2% from 2009, the USDA said.

Soybean yield based on Oct. 1 conditions was forecast at a record 44.4 bus an acre, down 0.3 bu from September but up 0.4 bu from the previous record high of 44 bus in 2009. Harvested area was forecast at 76.8 million acres, down 1% from September but up 1% from 2009.

Sorghum production in 2010 was forecast at 337,229,000 bus, down 10% from 376,469,000 bus in September and down 12% from 382,983,000 bus in 2009, the USDA said.

William Roenigk, National Chicken Council senior vice president, staff economist and market analyst, told MEATPOULTRY.com while a number of analysts anticipated a smaller corn crop and a smaller ending inventory, he isn’t sure all the analysts were ready to believe USDA was going to make quite this major of an adjustment this month. “I think the feeling was eventually they would make the adjustment of this magnitude and there are probably some more adjustments that will come downward in November,” he added. “USDA did finally reflect what’s really happening out there in the corn and soybean fields and they did raise the price as we see about 60 cents on both ends of the range per bushel.”

Last month, USDA was estimating a 2.6% increase in broiler production for next year, but they said the entire feed costs would trim that increase back to a 1.8% increase, Roenigk said. “That compares to a 2.6% increase for broiler production this year,” he added.

“I think USDA has overreacted in terms of how the broiler industry is going to react to these higher corn prices in terms of the 2.6%,” he continued. “I think it was closer to what’s really going to happen than the 1.8%. In fact, my number is closer to a 3% increase next year and I base that on companies ramping up their production. During the last few weeks, we have seen egg sets increase 5%. The number that came out this Wednesday for last month was a plus 8%. Of course, one, two or three weeks doesn’t make a year or a trend, but the point is companies are increasing the size of the hatchery supply flock -- the number of hens they have out there laying eggs. That doesn’t mean you have to put all the eggs in the incubator, but I believe companies are increasing their hatchery supply flock anticipating that they will step up production and the higher corn costs, higher feed costs, will challenge companies to remain profitable.

“I think a lot of companies are hoping that the less competition from beef and pork [anticipated for] next year and perhaps some improvement in broiler exports will allow broiler prices to improve,” Roenigk said. “It’s a bit of ‘a hope and a wish’, but I think companies have made a little money and they are willing to continue their plans to step up production something above what USDA’s expecting and trying to gain some market share from beef and pork.”
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