USDA: Corn production at 9-year low

INDIANAPOLIS (WISH) - We now know how devastating this year’s record smashing drought has been to Indiana’s most lucrative crop: corn.

Friday, the USDA released its much anticipated report detailing the supply and demand estimates of agricultural products in the United States, namely corn and soybean crops.

The findings were grim: total U.S. corn supplies for 2012-2013 are projected down 2.0 billion bushels – a 9-year low.

Central Indiana received something of a preview on July 17th when an undersecretary for the USDA toured farms in Johnson County. At the time, the undersecretary said 71-percent of Indiana's Corn crop was rated "poor" or "very poor."

“We have people in ever state go out into the fields, monthly, to assess the crops,” says Matthew Herrick, USDA Communications specialist in Farm and Foreign Agricultural Services. “Their assessments are compiled into monthly reports that are kept confidential until their release. ”

Herrick spoke with 24-Hour News 8’s Lauren Lowrey by phone and acknowledged the weight this report has on the rest of the world.

“We’re the number one exporter of food and agricultural products in the world,” said Herrick. But after this summer, our numbers have dwindled.

In 2011, the U.S. earned a record amount of $137.6 billion from exports of food and agricultural products. This, the USDA has already downgraded that expectation to $134 billion.

“The exports will go down a few billion more,” said Commodity Broker and owner of Capitol Commodity Services, Lannie Cohen. “This will be the busiest day in my three-decade career as a broker.”

Lannie Cohen detailed the importance of this report, live on Daybreak Friday, saying it was the most important report from the USDA, ever released.

“What the report says about our corn will determine whether nations of the world buy crops from us or from Argentina,“ said Cohen.

The issue is one of supply and demand. As the supply of corn in the U.S. was dramatically hampered by the worst drought in decades, the price of what corn developed skyrocketed nearly 70-percent.

“In an ordinary summer, with good production, our corn price per bushel was about $5,” said Cohen. “But since this drought, the price of corn has been trading at about $8.20 on the commodities market. Once corn hits $8/a bushel, other countries begin looking elsewhere to buy corn. In this case, they’re buying from Argentina. ”

Business diverted away from the U.S. and toward South America is a multi-billion dollar loss for local farmers across the country.

The newly released USDA report details a grimmer picture for future trading prices. It forecasts the 2012/13 season-average farm price for corn is projected at a record $7.50 to $8.90 per bushel, up sharply from the $5.40 to $6.40 per bushel projected one month ago, in July.

The other drawback to limited corn production in the U.S. is local farmers have begun to buy corn from other countries to feed their herds – because its cheaper. The report details imports for 2012/13 are up 45 million bushels to 75 million – which reflects strong domestic corn prices and competitively priced foreign supplies.

“Corn is used in a lot of livestock feed,” Cohen says. “For some farmers, that’s gotten too expensive, so they’re liquidating their herds. It results in cheaper meat prices now, but by spring, what we pay for meat at the grocery store will sky rocket. ”