The U.S. Department of Agriculture also trimmed its forecast for inventories of domestic soybeans for the current marketing year, which could boost soy futures.
In its monthly supply-and-demand report for major crops, the USDA said domestic corn inventories as of Aug. 31, the end of the current marketing year, are likely to be 851 million bushels, up 6.2% from the agency's previous forecast of 801 million bushels. None of the 19 analysts in a Dow Jones Newswires poll had expected the USDA to raise its forecast.
U.S. corn production is expected to rise this year to a record of 14.79 billion bushels, from 12.358 billion bushels last year, as farmers boost yields to what could be a record 166 bushels an acre, the government said. Yields last year were 147.2 bushels an acre.
Analysts for months have been worried about tight current corn supplies. Spot markets for physical delivery of the grain have been very strong, suggesting low availability. Recent Chinese purchases have heightened those concerns, and many analysts were waiting to see if the USDA would raise its corn export forecast--which it didn't.
"Lower prices, which this report will generate, will likely lead to even more exports," said Jason Ward, an analyst with Northstar Commodity in Minneapolis.
Domestic corn ending stocks are likely to more than double to 1.881 billion bushels by the end of the 2012-13 marketing year, the USDA said.
The expected increased production in the U.S., as well as around the world, is expected to push prices down and limit U.S. exports, federal forecasters said.
"Corn exports for 2012-13 are projected 200 million bushels higher than in 2011-12 on abundant domestic supplies, lower prices and higher expected China demand," the USDA said in its report. "Record foreign corn supplies, however, are expected to limit the increase in U.S. shipments."
The agency said domestic soybean stocks as of Aug. 31 are likely to drop to just 210 million bushels, down 16% from the 250 million bushels the USDA predicted a month ago and 2.3% from a year earlier, due to higher exports and domestic use at processors. The forecast is also lower than the 221 million bushels expected on average by analysts in the Dow Jones poll.
The ending-stocks forecast for the end of the next marketing year is even lower--down to 145 million bushels, below the average analyst prediction of 170 million bushels. U.S. farmers are likely to produce 3.205 billion bushels of soybeans this year, up 4.9% from last year, but that will be overshadowed by exports in the next marketing year rising 14.4% to 1.505 billion bushels, the USDA said.
The forecasts are likely to add to concerns about tightening soybean supplies amid lower South American production and rising Chinese demand. Soy futures have rallied since December on concerns about reduced output in Brazil and Argentina, which stems from a drought, and expectations their smaller production will drive more export demand to the U.S.
