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USDA Forecasts Bin Busting Harvest

posted on August 14, 2009

Even as policy makers perform triage on the nation's ailing health care system, government reports offered a mixed prognosis for the U.S. economy.

According to the Commerce Department retail sales fell 0.1 percent in July. Many analysts had expected a gain of 0.7 percent.

Fueled, in part, by the "Cash for Clunkers" program, auto sales rose nearly 2.5 percent — their largest gain in six months. But there was widespread weakness in the broader economy. Gasoline stations, department stores, electronics outlets and furniture stores all reported declines.

After concluding the economy appears to be leveling out, The Federal Reserve pledged to keep a key interest rate near zero for "an extended period" to nurture an anticipated recovery.

Wall Street was buffeted by the developments, but when the dust settled Friday, the Dow capped a volatile series of sessions with a weekly gain of just 10 points.

Of greater concern to many of those on Main Street though are prospects for commodity prices in the months ahead. To that end, the Agriculture Department gazed into its "crystal ball" this week to offer its latest crop production report.

USDA Forecasts Bin Busting Harvest

Despite survey results showing fewer acres, the corn harvest is projected to hit 12.76 billion bushels, up nearly half-a-billion bushels from June's estimate and, if realized, the second largest crop in history. The yield is projected at a bin-busting 159.5 bushels per acre -- which also would be the second highest on record.

USDA estimates 15 percent of the crop will be exported and 30 percent will be used to make nearly 12 billion gallons of ethanol.

Even with the resurvey showing an increased number of acres, USDA reduced its soybean harvest guess down by two percent to 3.2 billion bushels. If realized it would be the largest U.S. soybean crop ever recorded. Yields also are expected to be in record territory at 41.7 bushels per acre -- the fourth highest on record.

And production of all wheat varieties is estimated to be down more than 10 percent from last year to 2.18 billion bushels. Winter wheat, the major portion of the small grain crop, is anticipated to be nearly 20 percent smaller than last year at 1.54 billion bushels.

Many analysts believe supplies of corn and beans are adequate in the near term but already tight stockpiles leave little room for crop adversity. Nevertheless, the market reacted to the midweek report by moving slightly lower on Wednesday.


Tags: agriculture crops harvest markets news USDA