The USDA may cut its production forecast by 8.3 percent, the biggest July reduction since a drought in 1988 led the government to cut its estimate by 29 percent, a separate Bloomberg survey of 12 analysts showed. Farmers probably will collect 13.559 billion bushels, compared with the USDA’s June estimate for a record 14.79 billion, the survey showed.
Goldman Sachs Group Inc. said July 2 that yields will reach 153.5 bushels an acre, below the USDA estimate for an all-time high of 166.
“Corn yields were falling five bushels a day during the past week” in the driest parts of the Midwest, said Fred Below, a plant biologist at the University of Illinois in Urbana. “You couldn’t choreograph worse weather conditions for pollination. It’s like farming in hell.”
Even with the drought, U.S. production in 2012 is expected to rise 9.7 percent from last year to a record after farmers sowed the most acres since 1937, the survey showed. Higher output would help boost inventories before next year’s harvest, up from what analysts said will be a 16-year low on Sept. 1 of 837 million bushels.
Futures fell 2.2 percent on July 6, the most in two weeks, after the USDA reported a 90 percent drop in export sales in the week ended June 28. U.S. refiners curbed output of corn-based ethanol last week to the lowest since September as gasoline demand weakened, government data show.
Corn’s rally also may stall if Europe’s widening debt crisis and a faltering global economy erode record demand for the grain. The International Monetary Fund will reduce its estimate for growth this year because of weakness in investment, employment and manufacturing in Europe, the U.S., Brazil, India and China, Managing Director Christine Lagarde said July 6.
“The shrinking global economy is the elephant in the room that no one wants to discuss as long as U.S. crops are under siege,” said Dale Durcholz, the senior market analyst for Bloomington, Illinois-based AgriVisor LLC. “Corn demand at $5 is much more robust than when it costs $7.”