Corn and Soybean prices should move higher again this week.
The U.S. Department of Agriculture said Aug. 11 that corn production may total 12.914 billion bushels, 4.1 percent below its July estimate and still 3.8 percent more than last year. The national yield may average 153 bushels per acre, compared with 158.7 bushels estimated in July and 152.8 bushels a year earlier, the agency said.
The hottest summer since 1955 in Iowa and Illinois is eroding yield prospects for corn and soybean crops in the U.S., the largest grower and exporter.
Signs of diminished output appeared this week during a four-day, seven-state sampling of about 2,000 fields in the Midwest organized by the Professional Farmers of America, which will report its findings later today. A Bloomberg survey of 25 tour participants showed all expected the government to cut its corn-harvest forecasts and 21 predicted a reduction for soybeans.
Corn prices have jumped 24 percent since July 1 and soybeans touched a five-week high on Aug. 24 as crops in parts of the Midwest were damaged by more than 35 days of temperatures above 90 degrees Fahrenheit (32 degrees Celsius), government data show. Corn, the biggest U.S. crop, is the main ingredient in livestock feed and ethanol, a gasoline additive.
In Iowa, the tour estimated corn yields at 164.6 bushels an acre, based on 368 field samples. That's 2.8 percent below the findings in the same area last year, and less than the USDA forecast of 177 bushels for the state this year. In Illinois, the tour estimated yields at 156 bushels an acre, 6.3 percent below last year and less than the USDA forecast of 170 bushels.
The government estimates U.S. soybean production may decline 8.2 percent this year to 3.056 billion bushels, with yields averaging 41.4 bushels per acre.
Crop-tour participants counted an average of 1,159.3 pods per 3-square feet in western Iowa, down 14 percent from the findings last year, when the state yielded 51 bushels per acre. The USDA projects an average state yield of 52 bushels this year.
Soybeans still could see further problems, Jerry Gidel, a market analyst for North American Risk Management Services Inc. in Chicago, said in a telephone interview. Depending on what moisture comes in the next two or three weeks, that could have a huge impact on soybeans.
Higher corn prices are increasing costs for companies including Sanderson Farms Inc., the fourth-largest U.S. chicken processor, which yesterday reported a third-quarter net loss of $55.7 million. The company's cash-market corn costs were 85 percent higher in the third quarter than the same time a year earlier, while soybean-meal expenses rose 26 percent, Laurel, Mississippi-based Sanderson said in a statement.
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