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Gene Bohlen steered his combine through an 80-acre field of soybeans near Washington, Ill., for Bell Bros. Farming of Deer Creek, Ill.

David Zalaznik, Peoria Journal Star via AP

USDA raises soybean production outlook

  • Article by: RON NIXON
  • New York Times
  • October 11, 2012 - 8:58 PM

 

WASHINGTON - After months of battling sweltering heat and drought, a bit of good news emerged for farmers on Thursday: The Agriculture Department revised its estimates for soybean production higher, including in Minnesota, a sign that the drought had less of an impact on the crop than feared.

The news was not all good, however. The department, for the fourth consecutive month, lowered its estimates for corn, the country's largest cash crop -- though not in Minnesota, as the state continues to dodge the worst of the biggest U.S. drought in decades.

The lower overall estimates for corn supplies means customers will most likely see an increase in meat and dairy prices at the grocery store next year as the cost of animal feed -- made primarily from corn and soybeans -- remains high.

The Agriculture Department crop estimates are published monthly, but analysts say the October report is significant because it is during the harvest across the Midwest and probably provides the most comprehensive view yet of the impact of the drought on the size of the corn, soybean and other crops.

"I don't think you are going to see any more significant changes in production figures," said Jerry Norton, an analyst at the Agriculture Department. "The figures out today capture most of the impact of the drought, so it's hard to see estimates getting much lower from here on."

The USDA is now expecting corn yields in Minnesota of 168 bushels per acre, up 12 bushels from both last month's forecast and 2011's actual yield. Minnesota corn production is now forecast at 1.39 billion bushels, up 8 percent from last month's forecast and 15 percent from 2011.

Minnesota soybean production is forecast at 300 million bushels, up a whopping 14 percent over last month's so-so forecast and up 9 percent over last year.

Report pushes prices up

Grain prices rose after the release of the new USDA estimates. Corn rose 36 1/2 cents higher, to $7.73 a bushel, while soybeans jumped 25¼ cents higher, to $15.49 a bushel.

Despite the increase on Thursday, both crops remain below their record highs, which were set this year. In August, corn rose to $8.49 a bushel. Soybeans reached $17.89 a bushel last month.

The Agriculture Department on Thursday cut its domestic corn production forecast to 10.706 billion bushels, down less than 1 percent from the 10.727 billion estimated in September and down 13 percent from 2011. This represents the lowest U.S. corn production since 2006.

But the department raised its estimate for domestic soybean production this year by nearly 9 percent from its September estimate. In recent weeks, anecdotal reports and private forecasts had indicated that soybean yields in the Midwest were not as poor as previous estimates indicated.

The Agriculture Department's new estimates puts domestic soybean production this year at 2.860 billion bushels, up from its forecast last month of 2.634 billion.

Staff writer Mike Hughlett contributed to this report.

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