Corn Downwardly Revised 35 Percent from USDA Forecast

The corn yield for 2012 was downwardly revised by 31 analysts surveyed by Bloomberg, dropping 35 percent from the June 12 projection made by the USDA.

If that is close to being accurate, that means that corn stockpiles in the U.S. will stand at close to 1.216 billion bushels (30.89 million metric tons), on September 1, 2013.

Even though the USDA will release its next harvest and inventory estimates on Wednesday, July 11, it's unlikely to confirm or deny these numbers, as they usually change projections incrementally rather than all at one time. There is no doubt though that the numbers will go downward from the last forecast.

Estimates are the USDA could cut corn production estimates by over 8 percent in its next announcement.

As of July 1, the U.S. corn crop was the unhealthiest it has been since the drought of 1988, even though in some regions corn is in better condition than its 1988 counterpart because it was planted earlier this year, which allowed for extended root systems and better ability to access soil moisture.

With soil moisture depleting at rapid rates, those areas will come under extreme stress in the days ahead. Rains in those regions aren't expected to come until about July 17th or 18th at earliest.

At this time less than 50 percent of corn grown in the U.S. is in good or excellent condition. That's also the lowest levels since 1988, and way down from the 77 percent levels as of May 18, according to government data.

Expectations are all of this could result in corn approaching a record $8 a bushel by December.

Many people are missing something in the corn story though, as the record sowing of corn for the 2012 season will probably still result in record yields, with production in the U.S. expected to climb 9.7 percent over 2011 levels.

That will help raise corn inventories from the 16-year low of 837 million bushels as of September 1.