Once again the U.S. Department of Agriculture cut its corn yield projection, dropping it 17 percent from last month to 10.8 billion bushels. Last month the USDA projected a corn yield of 13 billion bushels.
The USDA is always conservative in its downward revisements, so it's quite possible we'll see another significant downward adjustment next month, once the data from northern parts of the country are more conclusive and a fuller picture is made available.
According to the World Agricultural Supply and Demand Estimates report from the USDA, the average farm will produce about 123.4 bushels an acre in 2012, the lowest average yield since 1995.
For soybeans, estimates are for a yield of 2.69 billion bushels, down 12 percent from 2011, and way down from the 3.05 billion bushels the USDA was looking for last month.
Soybean yields are expected to come in at 36.1 bushels an acre this year, the lowest level in 9 years.
Agriculture Secretary Tom Vilsack has foolishly called for more government interference in the markets, pushing for a farm bill that he asserts "gives farmers and ranchers more certainty in this tough time, while giving USDA tools to help those producers affected by weather-related events beyond their control."
In other words, he wants even more entitlements for farmers in order to prop up failed practices. Or to put it another way, he wants taxpayers to bail out the farmers, which of the giant farmers will be the primary beneficiaries.
This is the typical government-is-the-answer-to-everything thinking, where people and the decisions they make are not allowed to fail.
Business is all about using the best data available to see the clearest picture of the future it can. Government has no right to interfere with the true entrepreneurial spirit, and that includes in the agricultural sector.
The one thing that needs to be done is to drop all the failed ethanol supports and also the government props that cause many farmers to be lazy in their practices. They need to learn again to stand on their own and dig even deeper into best practices for the sector.