October 8, 2012 / 4:06 PM / 5 years ago

UPDATE 1-USDA could peg corn crop at 6-year low, slash end-stocks

* WHAT: USDA October crop production and supply/demand
reports
    * WHEN: Thursday, Oct. 11, 7:30 a.m. CDT (1230 GMT
    * Drought slashed corn crop to six-year low
    * Next year's end-stocks and stocks/use ratio to 17-year
lows
    * USDA may cut more harvested corn area in future reports

 (Adds crop and stocks graphic, adds expected harvest progress)
    By Sam Nelson
    CHICAGO, Oct 8 (Reuters) - A U.S. Department of Agriculture
report this week is expected to show that this year's U.S. corn
harvest was the smallest in six years and that corn supplies
could dwindle to 17-year lows by the end of next summer due to
crop losses from the worst drought in over 50 years.
    U.S. farmers have been harvesting the crop at a record fast
pace due to low yields and early maturing crops due to the
drought and early plantings. Traders said corn harvest was
probably from 60 to 65 percent complete as of Sunday.
    Last week the harvest was 54 percent complete, up from 39
percent the previous week and well above the 20 percent
five-year average.
    USDA will release its October crop production and
supply/demand reports at 7:30 a.m. CDT (1230 GMT) on Thursday.
    On average, 26 analysts polled by Reuters put this year's
corn crop at 10.601 billion bushels, which would be down 126
million bushels, or 1.2 percent, from USDA's September outlook.
    Analysts pegged ending stocks of corn for the current
2012/13 marketing year at 648 million bushels, which would be
down 85 million bushels, or 11.6 percent, from the government's
September outlook. It would represent the tightest supply since
the 1995/96 marketing year.
    The 2012/13 marketing year will end on Aug. 31, 2013.
 
    The analyst average for corn yield per acre actually
increased slightly to 122.884 bushels from the September USDA
forecast of 122.8, but they slashed the number of harvested corn
acres because of increased abandonment.
    Some analysts expect USDA to make its big cut in harvested
area in its final 2012 crop report in January.
    "The biggest question mark for me in this report is whether
USDA will feel comfortable adjusting its harvested acreage
estimate before more harvest results are in," said Bryce Knorr,
senior editor for Farm Futures Magazine.
     Acreage abandonment was larger than normal this year
because of the drought. Analysts on average pegged harvested
corn acres at 86.136 million acres, below USDA's September
forecast of 87.4 million.
    Based on the Reuters poll of harvested acreage and USDA's
September estimate of planted acreage, abandoned corn acres
totaled 10.269 million, the most since 10.306 million in 1993.
    Eleven percent of the planted corn acreage was abandoned,
the biggest percentage since 12 percent in 2002.    
    Based on analysts' projections, this year's harvested area
compared with area planted would be the smallest percentage-wise
since the 2002/03 crop year. 
    "We're expecting a reduction in both harvested acreage and
yield in this report. We thought they would do it in the last
report but it didn't happen," said Marty Foreman, feedgrains
analyst for Doane Advisory Services, St. Louis Missouri.
    "Illinois already has been accounted for and the focus now
is on Nebraska, Iowa and Minnesota ... we're expecting
reductions there," he said.
    
    RAZOR THIN SUPPLIES
    The stocks-to-use ratio, an important barometer of supply
versus demand, would drop to 5.76 percent based on USDA's total
usage number of 11.250 billion bushels in its September report,
also the lowest in 17 years.
    Razor-thin supplies of corn are expected by next summer
despite expectations that demand will begin to wane as corn
prices remain near historic highs. Corn currently trades around
$7.50 a bushel after hitting record highs near $8.50 in August. 
    Analysts are trimming their corn usage numbers, but only
slightly.
    An average of six analysts who submitted corn usage
forecasts for the 2012/13 marketing year pegged corn feed use at
4.057 billion bushels, down nearly 100 million bushels, or 2.24
percent, from USDA's September forecast of 4.150 billion.
    The average estimate of corn-for-ethanol use was 4.433
billion bushels, 67 million bushels, or 1.5 percent, below
USDA's current 4.5 billion bushel forecast. Analysts estimated
corn for export at 1.150 billion bushels, down 100 million
bushels, or 8 percent, from USDA's September outlook of 1.250
billion bushels.
    
    DWINDLING GLOBAL SUPPLIES
    In a separate Reuters poll, 12 analysts predicted a drop in
the global supply of corn and feed wheat next year.
    Feed wheat supplies were trimmed by droughts in the United
States and Russia's Black Sea region.
    The analyst average for world wheat ending stocks for
2012/13 was 172.813 million tonnes, below USDA's forecast in
September of 176.710 million, and corn ending stocks were
estimated at an average 121.322 million tonnes, below the USDA
forecast in September for 123.950 million.
    

 (Reporting By Sam Nelson; Additional reporting by Mark
Weinraub, Mike Hirtzer and Karl Plume in Chicago)

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