Bob Sampson
Extension Communications Specialist
University of Illinois at Urbana-Champaign

New USDA forecasts and estimates should provide significant support for corn, soybean, and wheat prices, said a University of Illinois Extension marketing specialist.

"Wheat prices may receive additional support from ongoing concerns about the condition of the hard red winter wheat crop," said Darrel Good.  "Prices for the 2003 corn and soybean crops and prices for the 2004 crops of all three commodities moved to new marketing year highs following  the reports.

"Expect prices to remain well-supported as long as the rate of use remains high."

Good's comments came as he reviewed a series of Jan. 12 USDA reports covering production, stocks, wheat seedings, and supply and demand.

"The reports provided a large number of surprises that should push corn, soybeans, and wheat prices at higher levels," he said.

In the case of corn, the 2003 U.S. production estimate is at 10.114 billion bushels, 164 million below the November forecast.  The market was expecting an increase.  The lower production figure reflected a 330,000-acre reduction in the estimate of planted acreage, a 626,000-acre reduction in the estimate of acreage harvested for grain, and a one-bushel reduction in the estimate of U.S. average yield.

"For the 2002-03 marketing year, the USDA shifted nearly 50 million bushels from the feed and residual category to the food, seed, and industrial category of use," said Good.  "For the current marketing year, feed use is now projected at 5.775 billion bushels, 75 million larger than last month's projection and 182 million larger than last year's use.

"First-quarter disappearance this year was much larger than expected."

Seed and processing use of corn is projected at 2.48 billion bushels, 30 million above the December projection and 134 million above last year's use.  Finally, exports are projected at 1.975 billion bushels, 50 million above last month's projection and 383 million above last year's exports.  Year-ending stocks are projected at a meager 981 million bushels, 106 million below the level of stocks at the start of the year.  The U.S. average farm price is projected in a range of $2.15 to $2.45, up from $2 to $2.40 projected last month.

"Corn production forecasts were also lowered for Argentina, South Africa, and Eastern Europe," said Good.  "However, those declines were more than offset by a larger forecast for Brazil.  The projection of Russia's feed grain crops as increased and the projection of Chinese corn exports was lowered by about 20 million bushels."