The U.S. Department of Agriculture (USDA) today reduced its forecast for this year’s corn and soybean harvests due to dry weather, setting up the potential for higher commodity prices.
U.S. corn production will be 12.1 billion bushels, down from last month’s estimate of 12.3 billion bushels, according to USDA. The soybean crop is projected to be slightly lower, at 2.93 billion bushels, down from its earlier estimate of 2.97 billion bushels.
The downgrade in the corn crop would be 8% below last year’s, but still would be the second-largest on record. The soybean crop would be 13% higher than last year’s and the fourth-largest ever.
This month’s report is only the second of the USDA’s reports this year to include actual field visits and farmer surveys, which analysts says are more reliable.
In last month’s first report, analysts suggested that “nearly ideal” weather conditions had helped Midwest fields to recover significantly from June floods that devastated crops that sent corn prices over $8/bu.
While corn prices have dropped about 35% from their highs, soybeans have jumped up to more than $12/bu. this summer
USDA has adjusted its price estimates for this season’s corn and soybean crops to $5-6/bu. for corn and $11.60-$13.10/bu. for soybeans. Both predictions are up 10 cents from last month.