World corn production will be smaller than estimated a month ago after dry weather damaged crops in the U.S., the International Grains Council forecast.
Farmers across the world will harvest 838 million metric tons of corn in the 2012-13 crop year, down 3 percent from 864 million tons forecast on July 26 and below last year’s output of 875 million tons, the London-based council wrote in an e-mailed report today. Corn prices surged 64 percent since mid-June on the Chicago Board of Trade, touching a record $8.49 a bushel on Aug. 10, as the worst U.S. drought in a half century cut yields.
“Drought has further stressed crops across the Northern Hemisphere,” the IGC said. “Exportable supplies in the U.S. and Ukraine have tightened and while the next crops in Brazil, Argentina and South Africa may be large, harvests are still several months away.”
Higher corn prices have boosted costs for ethanol makers including Archer Daniels Midland Co. and meat producers including Tyson Foods Inc. and Smithfield Foods Inc., which use grains and soybean meal in animal feed. The United Nations estimated that global food costs surged 6.2 percent in July, the most since November 2009, because of rising grain prices.
Corn production in the U.S., the world’s biggest grower and exporter, may total 275 million tons, down from 300 million estimated last month, the IGC said. The U.S. Department of Agriculture has predicted a U.S. harvest of 273.8 million tons, the smallest in six years, and global production of 849 million tons.
Ukraine, the world’s third-largest exporter in the previous season after Argentina, may produce 20 million tons of corn, 4.8 percent less than forecast a month ago, the IGC said.
World wheat output was estimated at 662 million tons, down from 665 million forecast last month, as dry weather eroded crops in the Black Sea region, the IGC said. The previous season, the world’s farmers harvested a record 696 million tons. The USDA expects global wheat output in the 2012-13 season to total 662.8 million tons.
Russia’s wheat crop may total 41 million tons, down from 45 million estimated in July, the IGC said. Milling-wheat futures in Paris have surged 31 percent since mid-June on NYSE Liffe on speculation that dry weather would spur Russia to restrict exports. Paris wheat prices almost doubled in 2010, when severe drought prompted Russia to ban grain shipments for 10 months.
Black Sea Outlook
Wheat prices have been “supported by a worsening outlook for Black Sea and Australian wheat,” the IGC said. “Black Sea exporters captured a high proportion of recent demand, but availabilities were soon expected to become short.”
The IGC cut its forecast for Australia’s wheat crop to 23 million tons, from 24 million estimated last month. The European Union may produce 133.1 million tons of the grain, more than last month’s forecast of 132 million, the IGC said.
Global production of soybeans may be 255 million tons in the 2012-13 season, up 7 percent from a year earlier, as South American output rebounds, the IGC said. The USDA has estimated the world harvest at 260.46 million tons.