Corn Market Building In Smaller Crop

With the release of USDA’s September crop report a week off, the corn market now seems to be anticipating at least a slight drop in the U.S. crop size.

Three private production estimates released since August 25 have pegged U.S. corn production at 10.862-10.877 billion bushels, compared with the USDA’s estimate of 10.976 billion bushels.

Those private estimates pegged the U.S. yield at 151.5-152 bu./acre, versus the USDA estimate of 153.3 bu.

Reports from the field have been indicating disappointing corn ear-fill, apparently due to the affects of the extreme heat that hit much of the Corn Belt during the pollination period.

The heat appears to have hurt ear-fill potential and the positive impact of improved rainfall and milder temperatures during August may have been limited by advanced crop maturity.

USDA’s Sept. 1 crop survey was based on ear counts and historical average ear weights, so it probably did not detect due to poor ear-fill.

On the other hand, USDA reported that ear counts in the 10 states that were included in the objective yield survey were the second highest on record behind 2004.

USDA did not release any details on ear counts in the August report, so depending on just how high the counts were, there may still be room for some increase in crop size even if ear weights are down.

Recent history also favors the September crop number coming in larger than the August estimate. In each of the past five years, USDA has raised its crop estimate in September.

If the September number does come in larger, history suggests heavy odds in favor of USDA’s final crop number being even larger.

If the average U.S. corn yield were to drop below 150 bu./acre, however, things could get very interesting as the corn market would start looking undervalued in light of current strong demand.

Editors note: Richard Brock, The Corn and Soybean Digest's > Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at

http://www.brockreport.com/brockreport.