Urbana, Illinois
March 9, 2009
Among a series of upcoming USDA
reports, more attention may be focused on the Prospective
Plantings report, said a University of
Illinois Extension marketing specialist.
"At the annual outlook conference, the USDA used a 2009
corn planting estimate of 86 million acres to construct the
projected supply and consumption balance sheet for 2009-10,"
said Darrel Good. "That projection is equal to 2008 plantings.
The USDA used an estimate of 77 million acres for soybeans, 1.3
million more than planted in 2008.
"The combined acreage of corn and soybeans appears low given the
4.2 million acre reduction in winter wheat seedings already
reported and the expected two million acre reduction in total
cotton, rice, and spring wheat acreage. However, the USDA
expects total crop land acreage to decline in 2009 as a result
of prospects for lower returns and fewer opportunities for
double-cropped soybeans."
Good's comments came as he reviewed two upcoming USDA reports to
be released on March 31. The March 1 Grain Stocks and
Prospective Plantings
reports each
could have important implications for corn and soybean prices.
"The March 1 inventory estimate should be more important for
corn than for soybeans, since the rate of soybean consumption is
well known, except for seed and residual use," he explained.
"The March 1 stocks estimate for soybeans then should be well
anticipated. Any large deviation from the expected level would
point to an error in the estimated size of the 2008 crop.
"For corn, the March 1 stocks estimate will reveal the rate of
domestic consumption during the second quarter of the 2008-09
marketing year. Any large deviation from the expected level
would mean that consumption occurred at a faster or slower rate
than projected and/or the size of the 2008 crop was incorrectly
estimated."
The expected level of consumption during the quarter, however,
is likely in a wide range, he added.
For soybeans, exports during the second quarter of the 2008-09
marketing year can be estimated from weekly USDA reports,
although the official Census Bureau estimates are currently
available only through December 2008. The January 2009 estimates
should be released this week.
Through December, cumulative Census Bureau export estimates
exceeded USDA estimates by 37 million bushels.
"Assuming that margin continued through February, second quarter
export would have totaled about 480 million bushels," he said.
Census Bureau soybean crush estimates are available through
January 2009 so that the February crush must be estimated to
calculate the likely level of March 1 stocks. Crush during the
first quarter of the year was 10 percent less than during the
same quarter last year.
"The December 2008 crush was 13.8 percent smaller, and the
January 2009 crush was 9.5 percent smaller than in the same
month a year ago," said Good. "If the February crush was about 9
percent smaller than that of a year ago, the total for the
second quarter would have been about 418 million bushels.
"Over the previous five years, seed and residual use of soybeans
during the second quarter of the year has ranged from 25.9 to
88.3 million bushels. The average was about 63 million bushels.
Using the five-year average for seed and residual use, second
quarter use of soybeans would have been near 960 million
bushels, resulting in March 1 stocks near 1.3 billion bushels."
USDA estimates place corn exports during the first half of the
year at 790 million bushels. Through December 2008, cumulative
Census Bureau export estimates were 45 to 50 million larger than
the USDA estimates.
"If that margin persisted through February, second quarter
exports were near 385 million bushels," he said. "Domestic use
during the quarter is difficult to anticipate, and expectations
will be in a wide range. Assuming that domestic use is on pace
to reach the USDA projection for the year and that use is
following a typical seasonal pattern, consumption during the
second quarter would have been near 2.6 billion bushels.
"Under these assumptions, March 1 stocks would have been near
7.1 billion bushels."
The intended planted acreage of individual crops revealed on
March 31 will be important, he noted.
"The market will assess those intentions and decide if relative
prices need to change to alter those intentions," said Good.
"Over-all price levels, however, will be influenced by the
magnitude of acreage intended for all crops.
"Unless total acreage is reduced, acreage intentions may point
to a potential surplus of one or more crops in 2009-10."
By Bob Sampson, University of
Illinois |
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