WASHINGTON, D.C., U.S. — In its monthly agricultural supply/demand update the U.S. Department of Agriculture (USDA) on Aug. 10 again lowered the outlook for U.S. corn production, reflecting the continued deterioration of this year's crop due to the once-in-a-lifetime drought that affects most of the U.S. corn belt.

The latest USDA projection lowers U.S. corn production to 274 million tonnes (10.8 billion bushels), down almost 40 million tonnes (1.6 billion bushels) from last year, and the lowest since 2006. World corn production is estimated at 849 million tonnes (33.4 billion bushels), down 27 million tonnes (1.1 billion bushels) from last year, but 19 million tonnes (748 million bushels) higher than 2010-11 due to higher production from China, Brazil and Argentina.

With this large reduction in U.S. corn supplies, higher prices are expected to ration demand during the coming year, the U.S. Grains Council (USGC) said on Aug. 13. From a broader perspective, world coarse grain feed use (including mainly corn, sorghum and barley) will be essentially unchanged from last year at 660 million tonnes, compared with 658.5 million tonnes in 2011-12.

Countries will respond to the tight corn supplies and higher prices in the coming year in different ways according the USDA estimate. For example, Japan and South Korea imports are projected be unchanged from 2011 to 2012. China's corn imports likely will decrease by 3 million tonnes (118.1 million bushels) due partly to a record domestic corn harvest of 200 million tonnes (7.9 million bushels), which is up 7 million tonnes (275.6 million bushels) from last year.

Globally, all corn users will face the challenge of higher prices and the need for increased efficiency, careful risk management and creative marketing strategies during the coming year, USGC said. As the projections for U.S. corn use demonstrate, the high prices will ration demand in all markets and in all sectors (feed, food and fuel). Also, the relatively smaller decline in U.S. exports compared to domestic use reflects the resilience of global feed demand.

Despite the decreases projected for U.S. corn production, the U.S. remains open to trade. In the coming year it will be vital that all exporting countries follow the U.S. example: Open markets, transparent market information and careful planning can help us all work through the coming year.

Agricultural production depends each year on weather factors beyond the control of governments or farmers. But agriculture and food production are basically optimistic lines of work. Each year U.S. farmers plant with hope, and do their best with what nature provides at harvest. U.S. farmers use the best genetics, technology and management practices to grow grains for the world market. As they prepare to harvest this year's disappointing crop, they look forward to normal weather and a record harvest in 2013, USGC said.