Urbana, Illinois
March 16, 2004
USDA Reports
Given that the record rate of consumption of U.S. corn is
expected to continue, and perhaps accelerate, in 2004-05, the
2004 U.S. corn crop needs to be large. Similarly, the poor end
to the South American soybean growing season and the
smaller-than-expected harvest there means the United States
needs to have a large soybean crop in 2004, said a
University of Illinois
Extension marketing specialist.
"U.S. soybean production would increase sharply in 2004
with no change in acreage and a return to a trend U.S. average
yield," said Darrel Good. "However, a larger corn crop will
require additional acreage and at least a trend yield in 2004.
The March 31 USDA Prospective Plantings report will reveal how
producers are intending to respond to the need for large crops
in 2004."
Good's comments came as he reviewed the halfway point in both
the 2003-04 corn and soybean marketing years which occurred on
March 1. He noted that it is now the time of year when both old
and new crop factors can influence price behavior.
"The market will continue to focus on the rate of consumption of
the 2003 crop, but is also very interested in prospects for the
2004 crops," he said. "The USDA's Grain Stocks and Prospective
Plantings reports to be released on March 31 will provide
critical information about both of these factors."
The estimate of the March 1 corn and soybean inventories will
provide a measure of the rate of domestic consumption of corn
during the previous three months; indicate the amount of corn
and soybeans available for consumption between now and the
harvest of the new crop; and provide an indirect check on the
accuracy of the 2003 corn and soybean production estimates.
Anticipating the estimate of March 1 stocks of corn is
complicated by the variation in the estimates of the magnitude
of exports to date, Good noted. Through January 2004, cumulative
Census Bureau export estimates
totaled 820 million bushels, while the two USDA estimates ranged
from 794 to 808 million bushels. The two USDA estimates placed
February corn exports at 142 and 149 million bushels,
respectively. Based on this array of estimates, cumulative
exports through February 2004 are calculated at 965 million
bushels, suggesting exports during the second quarter of the
year were at 490 million bushels.
"Domestic feed and residual use of corn is not measured, but is
calculated based on the quarterly stocks estimates, so that
surprises can occur with the release of the stocks report," said
Good. "For the current year, the
USDA projects a 3.6 percent increase in feed and residual use of
corn. If that rate of increase was experienced during the first
half of the marketing year, use during the second quarter should
have been near 1.515 billion bushels.
"Similarly, domestic processing use of corn is projected to be
7.3 percent larger than use of a year ago. If that rate of
increase was experienced during the first half of the year, use
during the second quarter should have been near 600 million
bushels. These calculations suggest second quarter use of corn
for all purposes at 2.605 billion bushels and March 1 stocks
near 5.34 billion bushels, about 200 million larger than stocks
on the same date last year. Stocks significantly larger or
smaller than this calculation could have important price
implications."
For soybeans, the Census Bureau estimate of cumulative exports
through January totaled 650 million bushels. The two USDA
estimates were at 626 and 642 million bushels, respectively. For
February, the two USDA estimates of exports were 84 and 90
million bushels, respectively, suggesting that cumulative
exports through February were near 736 million bushels. If so,
second quarter exports were near 346 million bushels.
"The Census Bureau estimate of the domestic soybean crush in
December 2003 and January 2004 was about one million bushels
more than the crush during the same two months last year. The
Census estimate for February is not yet available, but the
National Oilseed Processors' Association estimate of the crush
during February was 0.7 percent less than the crush during
February 2003," said Good. "If that ratio is also reflected in
the Census estimate, the February 2004 crush was about one
million less than during February 2003, suggesting second
quarter crush this year totaled 422 million bushels, equal to
the crush of the same quarter last year.
"If seed, feed, and residual use during the quarter was equal to
the 66 million bushels of a year ago, total use for the quarter
totaled 834 million bushels. March 1 soybean stocks, then,
should have been near 852 million bushels, the smallest
inventory for that date since 1984."
Good added that the level of stocks also implies that the use of
U.S. soybeans during the last half of the marketing year will
have to be 29 percent less than use during the last half of the
2002-03 marketing year. |
