U.S. corn inventories drop less than expected
Corn prices dropped dramatically Friday after a government report showed U.S. supplies were larger than anticipated.
Bloomberg News reports that there is still less U.S. corn in storage than last year, but the drop is not as steep as had been expected. That's because livestock producers have been substituting more wheat for corn in feed rations.
Corn stockpiles on Sept. 1 -- before the start of this year's harvest -- totaled 1.128 billion bushels, down 34 percent from the 1.708 billion a year earlier, the U.S. Department of Agriculture said in a report released Sept. 30. The revised estimate sent grain prices plummeting on Sept. 30 to 2011 lows, with both corn and wheat down more than 6 percent.
Corn harvest has since begun -- rather slowly. An estimated 15 percent of the crop was collected as of Sept. 25, down from 26 percent a year earlier and the previous five-year average of 16 percent, the USDA said this week. Mostly dry weather is expected to aid harvesting over the next 10 days.
The Washington Post reported on the potential impact on consumer prices:
Corn prices have been higher compared with the same time a year ago because of expectations that the grain would be in short supply in the U.S. and abroad. Higher corn prices factor into what consumers pay for many kinds of products including cereal, beverages and ethanol. High corn prices can also affect the cost of meat because corn often is used to feed livestock.
The revised estimates could mean some of those higher consumer prices will start to ease in the next six months, analysts said.
The USDA earlier this month predicted a harvest of 12.497 billion bushels, up 0.4 percent from last year and down from 12.914 billion forecast in August.
Click here to read the Bloomberg story, which also updates the soybean outlook.