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2010 U.S. corn crop: Largest crop on record

Jan. 12, 2011 – USDA has released its final report on the size of the 2010 corn crop and supply, as well as its updated estimates of corn use. The January report did make a couple of important changes.

First, it lowered average corn yields to 152.8 bushels per acre, still the 4th highest in history. The reduction in yield was offset by the addition of 100,000 harvested acres. Final 2010 corn production as seen by USDA stands at 12.45 billion bushels – the 3rd largest crop in history.

Second, USDA increased its demand forecast for ethanol to 4.9 billion bushels for the marketing year (Sept. 1, 2010 to Aug. 31, 2011). That translates to ethanol production of about 13.5 billion gallons. Recognizing the contribution of distillers grains and other feed co-products of ethanol production, USDA did lower its livestock feed usage by 100 million bushels.

Third, USDA is showing ending stocks of corn at 745 million bushels, down from the previous report.

RFA Analysis: While not as large as originally thought, the 2010 corn crop is quite robust considering the challenges much of the Corn Belt endured. With the 4th highest yields and 3rd largest crop on record, American farmers once again demonstrated their ability to produce a safe and abundant corn supply.

USDA’s estimates of ethanol production for the 2010/2011 marketing year fall in line with industry expectations. It is unlikely that USDA will revise that number any higher in the near term given the constraints of the E10 blend wall and the anticipated slow adoption of E15 ethanol blends.

While domestic corn supplies are lower than last year’s record supply, global supplies of food grains like rice and wheat (i.e. those most often used for direct human consumption) remain strong.

This report will undoubtedly be like catnip for speculators that will predictably seek to drive commodity markets higher. This scenario has played out before, most recently in 2007/2008 when all commodities, led by crude oil, soared to unjustified and unsustainable levels. Moreover, enthusiastic Malthusians and other doomsday prognosticators will use this report to blame biofuels for food insecurities that have existed for decades.

The fact remains global supplies of grains remain sufficient to meet needs. Instead of casting blame, we should be investing in technologies that will help farmers in developing nations improve their productivity. We should also focus more intently on helping developing nations invest in renewable fuels and other technologies that mitigate climate change impacts and incentive more efficient and productive farming practices.