Yield forecasts were increased in the Western Corn Belt and the northern half of the Great Plains as mild temperatures and adequate soil moisture supplies provided favorable growing conditions. Yields were unchanged in the Eastern Corn Belt where dry conditions in August depleted soil moisture supplies.

The USDA raised their estimate for U.S. corn ending stocks for 2009/10 by 14 million bushels to 1.635 billion bushels due to the increased yield, partially offset by 100 million bushel increase in exports and 50 million bushel increaes in feed. The USDA lowered the 2009/10 season-average farm price for corn to $3.05 to $3.65 per bushel from $3.10 to $3.90 per bushel.

U.S. soybean ending stocks for 2009/10 were raised by 10 million bushels to 220 million due to an increase in yield per acre to 42.3 bushels per acre. The USDA lowered it soybean price estimate for the 2009-10 crop to $8.10 to $10.10 per bushel, down 30 cents from last month's forecast.

The USDA maintained its forecast of wheat ending stocks for the 2009/10 crop by 37 million bushels to 743 million bushels, which is an 11% increase from last year's estimated ending stocks. The USDA lowered its average farm price range for the 2009/10 crop to $4.70-$5.70 per bushel, from $4.80-$5.80 per bushel.

We view this report as neutral for grain prices as the yield estimates fall within consensus expectations. We expect there may be a possibility of a late-seaon rebound in corn prices, as the acerage forecast may be overstated.

- Colvin