Heavy rain hits Midwest corn crops

 The US Department of Agriculture this week revised its forecast for national corn and corn oil output down 3 per cent from last month's prediction in part due to the continuing heavy rains in the Midwest. However expert opinion is that the situation is set to worsen because the continued bad weather will force the USDA to lower its estimate of corn acreage in addition to the lower yields per acre already announced. The USDA June supply/demand report trimmed its forecast for this year's crop to just over 11.7 billion bushels, down from its May forecast of 12.1 billion. If the crop comes in as forecast, it would be a huge 10 per cent reduction from last year's record crop of over 13 billion bushels. USDA also cut its outlook for the corn supply at the end of August 2009 to only 673 million bushels, the lowest in 13 years, a three-week supply and roughly half the expected stockpile at the end of this summer at 1.433 billion. In response to the news, US corn prices on Tuesday soared to a record high of $US7.20-1/2 per bushel for July. Persistent rains and flooding in key corn states Iowa, Illinois, Indiana, Nebraska and Missouri should make the crop outlook more precarious and send corn prices still higher. "Farmers are going to start to adjust the acreage because of the rains the US experienced this last week," an analyst for Tootoo.com has said. "Corn has suddenly become very bullish." The damaging rainfall comes at a time when every bushel is needed to meet the soaring demand for food and fuel. Corn is the root stock for the growing US ethanol fuel industry so further controversy about the use of corn as fuel versus feed and food is bound to follow.