Corn Rises After USDA Cuts U.S. Acreage, Harvest Forecasts

By Jeff Wilson

Oct. 28 (Bloomberg) -- Corn rose for a second straight day after the U.S. Department of Agriculture reduced its production forecast from earlier this month because of errors in acreage estimates.

The U.S. corn harvest, the world's largest, will be 12.033 billion bushels, 1.4 percent less than estimated on Oct. 10, the USDA said today. The department cut its estimate of harvested acres by 1.3 percent and said inventories on Aug. 31 will total 1.088 billion bushels, down 5.7 percent from an earlier forecast of 1.154 billion. Corn prices touched a one-year low yesterday and are still down 48 percent since the end of June.

``This has changed the dynamics of the supply balance,'' said Dale Schultz, a commodity specialist for Gottsch Enterprises in Hastings, Nebraska. ``The report suggests a bottom in place and prices undervalued.''

Corn futures for December delivery rose 5.5 cents, or 1.4 percent, to $3.9075 a bushel on the Chicago Board of Trade, after earlier rising 6.4 percent to $4.0975. Yesterday, the price touched $3.64, the lowest for the most-active futures in more than a year. Corn reached a record $7.9925 on June 27.

The government reduced its estimates of planted and harvested land by 1 million acres, including 300,000 acres in Iowa, the biggest producing state, and 200,000 acres in Illinois, the second-biggest grower.

The estimated drop in acres harvested cut the average U.S. yield to 153.9 bushels an acre from 154 bushels forecast earlier this month, said Chip Flory, editor of the Professional Farmers of American newsletter in Cedar Falls, Iowa.

Wind Damage

Winds in excess of 50 miles (80 kilometers) per hour in the Midwest on Oct. 25 and Oct. 26 may further reduce the average yield even after an extended growing season this month boosted crop potential, Flory said.

About 39 percent of the corn crop was harvested as of Oct. 26, behind last year's pace of 70 percent for that date, the USDA said yesterday. About 64 percent of the crop was in good or excellent condition, up from 62 percent a week earlier.

``The windstorms may have cut an additional 10 bushels in a lot of unharvested fields,'' Flory said. ``It will be tougher to see an increase in final yields.''

Corn is the biggest U.S. crop, valued at a record $52.1 billion in 2007, government figures show.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net