Bountiful corn harvest forecast

After spate of bad weather, USDA sees 2nd-highest yield on record

August 13, 2008|By New York Times News Service

After an extremely worrisome start that fanned fears of famine and economic devastation, the nation's most crucial crop is on track for a bountiful harvest, the government said yesterday.

The Department of Agriculture is forecasting the second-highest corn yield on record with production of 12.3 billion bushels, nearly 600 billion bushels more than it forecast earlier in the summer.

"We dodged a bullet," said Bill Nelson, a grains analyst at Wachovia Corp.

As cool weather in April and downpours in May gave way to extensive flooding in June, prospects seemed dim for corn, which in recent years has increased in importance as ethanol has become a government-mandated gasoline additive.

Many farmers had to replant; some ran out of time.

Food groups went to battle with ethanol interests, saying there was not enough corn for both food and fuel. Corn futures went to an unheard of $7.50 a bushel, triple the price of a few years ago.

Some analysts worried that $9 or even $10 a bushel was a possibility, a price that might have been ruinous to livestock producers and ethanol plants alike.

Then nature began to cooperate.

In the Midwest this summer, the weather has been exactly what corn needed to thrive. "Not too hot, not too cold, not too wet, not too dry," Nelson said.

Corn prices, which have been falling for weeks, were trading yesterday at a little more than $5 a bushel.

The highest corn yield on record was 160.4 bushels an acre in 2004. The new 2008 estimate of 155 bushels is up 3.9 bushels an acre from last year. Actual production will still be lower than last year's because farmers planted fewer acres.

The soybean crop is more of a question mark because it was planted later than corn.

The government is forecasting 2.97 billion bushels, down about 30 million bushels from its earlier forecasts.

But that, too, is much better than many feared in June.

Soybean futures reached a high of more than $16 at the beginning of July. Yesterday, they were trading at about $12 a bushel.

Despite the improved prospects for the crops, and thus lower prices for feed, the livestock producers were not in the mood to celebrate.

"Given that ethanol is continuing to divert an ever larger share of our corn supply away from feed and food, even a harvest like the one predicted by USDA may not be enough to prevent continued food inflation and to avoid additional harm to family farmers who raise meat and poultry," said Joel Brandenburger, president of the Washington-based National Turkey Federation.

Farmers, who are inherently cautious, are not banking on any good news until after the harvest.

And a late start means a late harvest. The government corn yield estimate of 155 bushels is a dream to some of them.

Dan Meinhart, an Effingham, Ill., farmer, said the prospects in his area did not reflect the government's optimism.

Meinhart had to replant nearly all of his corn and beans after the spring and early-summer rains washed them away.

He is expecting a corn yield of 130 bushels.

"Spanish needles are blooming already, and the old-timers say that means it will frost in six weeks," Meinhart said of the Eastern U.S. bur marigold.

"We need at least eight to 10 weeks to get the crop in."

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