Farm-gate prices for US corn and soyabeans will sink to stressful levels under the weight of the second mammoth harvest in a row, the government forecast on Wednesday.
The Agriculture Department estimated a corn stockpile of 2.22 billion bushels at the end of this marketing year, the largest corn surplus in 18 years. At 260 million bushels, the soyabean carry-over would be the largest in six years.
On the heels of records set last year, USDA pegged the corn crop at 10.857 billion bushels (276 million tonnes), soyabeans at 2.967 billion bushels (81 million tonnes) and cotton at 22.72 million bales - each representing the second largest US crop of its type on record.
Corn was up 2 percent and soyabeans up 4 percent due to yields that were higher than expected a month ago.
Low prices mean larger crop subsidy costs for USDA. Its estimate of a season-average corn price of $1.85 a bushel is 5 cents below the minimum price guaranteed to growers. Earlier this month, one farmer said the country elevator price for corn in central Illinois was $1.37 a bushel.
Soyabeans will fetch an average $5.40 a bushel and wheat, $3.40, USDA said. In both cases that is above the support price but still low enough to potentially trigger USDA payments to lift returns to the target level set by Congress.
The farm-gate prices forecast by USDA were similar to low prices at the start of this decade. In fiscal 2000, crop subsidy payments hit $27 billion. This year, the payments are estimated at roughly $18 billion, up $2 billion from last year.
In a review of the fall harvest, USDA said "the drastic loss" of trees to the citrus canker would limit the Florida orange crop to a small 190 million boxes.
Hurricane damage reduced Louisiana sugar output by an additional 104,000 short tons, to 1.152 million tons, or 16 percent less than forecast before Katrina hit on August 29. Florida sugar output was up slightly.
USDA estimated a corn (maize) yield of 146.1 bushels an acre, up 2.9 bushels from September. Soyabeans were up 2 bushels, to 41.6 bushels an acre.
"As harvest progresses, (corn) producers are finding the warm, dry conditions during July and August did not reduce yields as much as originally expected," USDA said.
As for soyabeans, USDA said "below-normal temperatures and adequate moisture during August and early September across most of the Corn Belt, Great Lakes and Delta were beneficial for the crop during the final stages of development."
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