USDA Corrects Corn Production, Will Lift Prices

Stronger cash corn prices are being predicted as a result of unprecedented corrections to an official crop report Tuesday by the U.S. Department of Agriculture.

The report said that U.S. farmers will probably harvest about 1 million acres less of corn than they said in the last report, with soybeans also being much less than the previous report.

What this effectively does is cut expected production by close to 1.5 percent than what was projected on October 10.

"Corn production is forecast at 12.033 billion bushels, down 167 million from the Oct. 10 forecast," said the USDA. "Soybean production is forecast at 2.938 billion bushels, up slightly from the September forecast, and up 10% from last year. If realized, this will be the fourth largest production on record."

As a result of the corrections, corn will ending stocks of about 1.088 billion bushels, a drop of 6 percent. That should push corn prices up a little going ahead.

With the new statistics, expectations are the average bushel of corn will increase by about 5 cents to $4.25 to $5.25 a bushel.

For only the third time since 1980, over 60 percent of the corn crop in the U.S. still has to be picked as of October 26.

Corn Futures Increase from News on Initial Government Injection of Capital into Banks

The emotional boost given by the announced plan of the U.S. government to take $250 billion of the $700 billion bailout and inject it into "healthy" U.S. banks, has caused many commodities to rise over the last couple days, but that will be short lived.

For corn, it partook in the overall boost by increasing by 6.75 cents for December delivery to reach $4.18 a bushel on the Chicago Board of Trade. Earlier in the day it was higher at $4.29 a bushel.

So far this year corn maturity has dropped significantly from last year, as a recent report from the USDA says, where as of October 5 it was only as 73 percent maturity, in contrast to last year during the same period where it was at 95 percent. Later today the U.S. Department of Agriculture will release their weekly crop report.

USDA Raises Monthly Corn Forecast

The monthly forecast by the U.S. Department of Agriculture on Friday reported corn production for the year could be a much higher 12.2 billion bushels, a significant increase over September's projection of 12.1 billion bushels.

While wetter weather has a strong impact on production, the resultant success will probably put more downward pressure on corn prices, as the agency revised its season-average per bushel to a range of $4.20 to $5.20. That's a drop of 80 cent from September's estimate.

At the end of Thursday's session on the Chicago Board of Trade, corn for December delivery ended at around $4.38 a bushel.

Corn Prices Move Up After Fed and Other Central Banks Cut Interest Rates

Corn for December delivery on the Chicago Board of Trade climbed by 10.5 cents Wednesday after the U.S. Federal Reserve and several other central banks around the world cut their interest rates. After the interest rate cuts corn did rebound settling at $4.275 a bushel on the CBOT, a 10.5 cent or 2.52 percent gain.

While many other commodities dropped, which temporarily made central banking officials feel good because of the usual response of inflation emerging from declining interest rates, corn was one of the few that responded in the positive as demand falls because of a variety of inflationary pressures.

Interest rates in the U.S. were cut from 2 percent to 1.5 percent in hopes of stimulating the economy. Other central banks working in unison with the Fed cut rates by half a percent as well.

Corn Drops Maximum Allowed on Spread of Economic Fears

Corn dropped by the maximum allowed on the Chicago Board of Trade (CBOT) today as the spread of economic fears and realities is starting to hit Europe hard, and China and India are showing signs of slowing demand as well.

Growing concern on a global scale is causing almost all commodities to fall in price as demand across the board decreases. The only exception to positive growth for commodities for today was with Gold.

Much of the problem continues to be access to capital. It's possible to continue to have a negative impact even as prices drop because of inability to acquire the needed operational funds.

Corn for December delivery fell as low as the maximum allowed, to $4.24 a bushel earlier in the day.

The golden nugget continues its poor performance, following up its horrible week that just ended where it crashed by 16 percent, the most since June 1973.

It's far down from its $7.9925 a bushel it reached on June 30 of 2008, a 47 percent plunge.

Corn in Slight Rebound after Plunging Yesterday

Corn futures are enjoying a slight rebound today after falling by almost 5 percent in Tuesday trading.

On the Chicago Board of Trade, prices for December delivery rose by 4.75 cents to $4.88 a bushel.

Most industry watchers agree that until a decision one way or the other is made concerning a government bailout, things will remain in flux concerning most commodities. There will be another vote today to attempt to pass a bill.

Yesterday corn futures fell to $4.88 a bushel, the first time it dropped below the $5 mark since January. The almost 5 percent drop was the largest in 12 years.

Corn inventories as of September 1 has risen by 25 percent over a year ago according to the U.S. Department of Agriculture. Corn inventories stand at 1.62 billion bushels.