The USDA’s November Crop Production and WASDE reports released this morning contained a number of changes in production and consumption forecasts for corn, soybeans, and wheat for the current marketing year. Following is a brief summary of those changes.

Corn

The 2011 U.S. corn crop is now forecast at 12.31 billion bu., 123 million smaller than the October forecast and 137 million smaller than the 2010 crop. The national average yield is forecast at 146.7 bu., 1.4 bu. lower than the October forecast. Yield forecasts declined substantially for Minnesota, the Dakotas, and Texas. The Illinois average yield was lowered by 3 bu. to 156 bu., while the Iowa forecast was increased by 2 bu. to 171 bu.

Outside the U.S., corn production forecasts were increased for Argentina and China and reduced for Mexico. The total foreign production forecast was increased by only 80 million bu., or 0.2%.

On the consumption side, the forecast of domestic feed and residual use of corn was reduced by 100 million bu. to a total of only 4.6 billion. That forecast is 200 million below the low level of feed and residual use last year. USDA cited reductions in broiler production and a smaller crop forecast as the reasons for the cut. A smaller crop implies smaller residual use.

Year-ending stocks are projected at 843 million bu., only 23 million less than the October forecast. The forecast of the season’s average farm price is in a range of $6.20 to $7.20, unchanged from the October forecast.

Soybeans

The 2011 U.S. soybean crop is now forecast at 3.046 billion bu., 14 million less than the October forecast and 293 million bu. smaller than the 2010 crop. The U.S. average yield is forecast at 41.3 bu., 0.2 bu. below the October forecast and 2.2 bu. below the 2010 average. Changes in state level yield forecasts for the major producing states were 1 bu. or less, except for the 2-bu. increase for Wisconsin.

Outside the U.S., the soybean production forecast was reduced by 37 million bu. for Argentina and increased by 55 million bu. for Brazil. The world production forecast is almost unchanged from last month’s forecast and about two percent smaller than the 2010-11 crops.

On the consumption side, the USDA lowered the U.S soybean export forecast by 50 million bu. At 1.325 billion bu., the forecast is 176 million below the record exports of last year. The lower forecast reflects what USDA believed to be the slow pace of sales through October. While the forecast of the domestic crush was unchanged, the forecast of soybean oil exports was reduced by 300 million lbs. Projected consumption of soybean meal was unchanged, with expectations of slightly larger exports offset by lower domestic consumption.

Year-ending stocks of soybeans are projected at 195 million bu., 35 million larger than the October forecast. The forecast of the season’s average farm price is in a range of $11.60 to $13.60, $0.55 lower than the October forecast.

Wheat

The estimated size of the 2011 U.S. wheat crop was reduced by 8 million bushels, while forecasts of consumption were unchanged. The forecast of the season’s average farm price is in range of $7.05 to $7.75, compared to the October forecast of $7.10 to $7.90. Much of the 2011 winter wheat crop has already been sold by producers. The forecast of foreign wheat production was increased by 86 million bu. (0.4 percent), reflecting a larger crop estimate for Kazakhstan.

Implications

While a number of changes to world crop production and consumption forecasts were made today, the forecasts of world year-ending stocks of wheat, coarse grains, and soybeans were not much different than last month’s forecasts. Domestically, soybean stocks are expected to be more abundant than earlier forecasts, with the forecast of year-ending stocks representing 6.3% of projected consumption. It appears, however, that the lower U.S. soybean export forecast may be premature. Weekly export sales reports will continue to shed more light on that issue. The projection of domestic year-ending stocks of corn represents 6.7% of projected use. The lower projection of feed and residual use of corn this month also appears premature. The pace of consumption will be revealed in the USDA’s quarterly Grain Stocks report, with the estimate of Dec. 1, 2011, stocks scheduled to be released on Jan. 12. Overall, today’s projections should support corn and wheat prices in the upper part of the recent trading range. The projections are less supportive for soybeans, suggesting trading in the lower part of the recent range.