Nov. 17—The corn and soybean market observed a rare historical revision from the October USDA supply and demand report. Therefore, the November report did not reveal anything too exciting. The corn portion in the October revision changed only slightly compared to the soybean supply and demand. Corn yield was 154 bushels per acre versus 152.3 in October, and carry-out increased from 1.018 billion bushels to 1.154 billion.

Corn demand for ethanol was reduced by 100 million bushels as gasoline consumption is expected to slow. Livestock feed demand increased by 150 million bushels while other industrial use was lowered by 10 million bushels. Feed demand increased due to lower grain prices and the reduced availability of distillers grains. World corn inventories fell 2.18 million metric tons from September to October. One component of that equation was an increase in world corn use for livestock feed demand. From a coarse grain perspective, the world carry-out actually increased by 0.15 million metric tons.

The November report reduced yield by 0.1 bushels per acre, which was surprising. In the December EPM, we detailed how, historically, corn yield increases from October to November if it increases from September to October. However, fall 2008 made this untrue partly due to the October USDA revision. Nonetheless, this will be the second-highest yield on record behind 2004, and production will be the second largest behind the 2006-'07 crop year.



The graph indicates an increase in wheat feeding in 2008 compared to 2007. Total feed demand has been lower due to less livestock feeding and/or more ethanol coproduct feeding. With freight values decreasing due to slowing demand, wheat has actually been rumored to come into portions of the Western Hemisphere.