As expected, USDA made moderate cuts to its projections for 2011-2012 South American corn and soybean production on Thursday due to dry conditions in growing areas there, which should support export demand for U.S. supplies.
USDA slashed its estimate of Argentina’s corn production by 10.3% to 26 million metric tons (mmt) compared with its December estimate of 29 mmt as that crop appears to have suffered the most damage so far. The cut should be no surprise as trade estimates of Argentina’s crop averaged 25.8 mmt in a recent Reuters News Service poll.
USDA noted "sharply reduced (corn) yield prospects" in Argentina due to extended dryness and periods of extreme heat in late December and early January.
"Recent rains have brought much needed relief from high temperatures and dryness and are expected to stabilize crop conditions, but substantial damage has been done, especially to corn that was exposed to heat during pollination and early grain fill," USDA said in its monthly World Supply/Demand Outlook.
USDA also trimmed projected soybean production for Argentina by 1.5 mmt (2.9%) to 50.5 mmt, which compares with trade estimates averaging 50.84 mmt. USDA noted that hot, dry conditions are expected to limit Argentine soybean acreage and reduce yields from previous expectations.
USDA made only a modest cut of 1 mmt to its forecast for Brazil’s soybean crop, which it now sees at 74 mmt, down 1.5 mmt 2010-2011.
Crop losses in southern Brazil should be partially offset by favorable growing conditions in the country’s main center-west soybean belt, USDA noted.
USDA left its estimate of Brazil’s corn crop unchanged at 61 mmt, compared with trade estimates averaging 59.53 mmt, citing "rising area prospects" for Brazil’s second corn crop, which should offset first-crop losses due to dryness in southern growing areas.
Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.