Urbana, Illinois
August 13, 2008
USDA August forecasts of corn and
soybean production were close enough to market expectations that
a large price reaction is not expected, said a University of
Illinois Extension marketing specialist.
"Given the unusual level of uncertainty surrounding
production prospects this year, the report has the potential to
produce a sharp price response," said Darrel Good. "Given the
large price drop over the past three weeks, the greater risk may
be smaller than expected.
"The market will try to gauge whether production prospects
change during August and early September," said Darrel Good.
"The USDA's weekly Crop Progress report indicated that crop
condition ratings improved for corn and held about steady for
soybeans during the week ended Aug. 10. Both crops lag average
maturity.
"Only 30 percent of the corn crop was in the dough stage
compared to the average of 50 percent and only 60 percent of the
soybean crop was setting pods, compared to the average of 75
percent. In addition to average temperature and rainfall in
August and early September, production could be influenced by
the occurrence of the first killing frost."
Good's comments came as he reviewed the USDA's early anticipated
August Crop Production report which revealed prospects for a
2008 U.S. corn crop of 12.288 billion bushels and a soybean crop
of 2.973 billion bushels. Both forecasts, as noted, were within
the range of pre-report guesses, but the corn crop forecast
exceeded the average guess by 350 million bushels.
Based on extensive re-interviews in Illinois, Indiana, Iowa,
Minnesota, Missouri, and Wisconsin, planted acreage of corn is
estimated at 86.977 million acres, 350,000 less than the June
estimate. Acreage estimates declined by 100,000 in Illinois,
Indiana, and Iowa and 50,000 in Wisconsin.
Acreage expected to be harvested for grain is forecast at 79.29
million, 350,000 more than forecast in June. The U.S. average
yield potential is pegged at 155 bushels, 3.9 bushels above the
2007 average and the second highest following the average of
160.4 bushels in 2004. The crop forecast of 12.288 billion is
786 million smaller than the record crop of 2007.
"In a separate report, the USDA's World Agricultural Outlook
Board increased the forecast of corn used for ethanol during the
current marketing year by 50 million bushels and during the
2008-09 marketing year by 150 million bushels," said Good.
"Exports during the current year are expected to reach 2.425
billion bushels, 25 million less than projected last month.
"The projection of feed and residual use during the 2008-09
marketing year was increased by 100 million bushels. Stocks of
corn on Sept. 1 are forecast at 1.576 billion, 22 million below
the July forecast while Sept. 1, 2009 stocks are projected at
1.133 billion, 300 million above last month's forecast."
The 2008-09 marketing year average farm price is forecast in a
range of $4.90 to $5.90, 60 cents below the July forecast, he
added.
"There were also some changes in coarse grain production
forecasts for other parts of the world," he noted. "Production
prospects have declined for Argentina, but improved for Canada,
Mexico, the European Union, Russia, and the Ukraine. Coarse
grain production outside the United States is forecast at a
record 760.33 million metric tons, nearly 5 percent larger than
last year's crop."
Planted acres of soybeans in the United States are now estimated
at 74.783 million acres, 250,000 above the June estimate.
Acreage estimates were increase by 100,000 acres in Indiana and
Iowa and by 50,000 acres in Wisconsin.
Harvested acreage is projected at 73.341 million, 1.22 million
more than forecast in June. Forecasts of harvested acreage
increased by 50,000 in Illinois, Indiana, and Iowa; by 10,000 in
Missouri; and 70,000 in Wisconsin.
"The U.S. average yield potential is seen at 40.5 bushels, 0.7
below the 2007 average and the lowest since 2003," said Good.
"Yields are expected to be below the 2007 average in Illinois
and Iowa, but a bushel higher in Indiana. The projected crop of
2.973 billion bushels is 388 million larger than the 2007
harvest."
The USDA's World Agricultural Outlook Board reduced the forecast
for the domestic soybean crush during the current year by 10
million bushels and raised the forecast of year-ending stocks by
an equal amount, to 135 million bushels. The forecast of the
domestic crush for 2008-09 was reduced by 15 million bushels.
Stocks of soybeans on Sept. 1, 2009 are expected to remain small
at 135 million bushels. The 2008-09 marketing year average farm
price is projected in a range of $11.50 to $13, 50 cents below
the July forecast.
"Soybean production in Brazil in 2009 is forecast at 2.3 billion
bushels, 55 million less than forecast last month but 55 million
more than produced this year," said Good. "For Argentina,
production is forecast at 1.82 billion bushels, 55 million more
than forecast in July and 110 million more than the 2008
harvest."
By Bob Sampson, University of
Illinois |
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