Urbana, Illinois
July 14, 2008
There is a lot of the growing
season left, but current crop and weather conditions suggest the
possibility for further weakness in corn and soybean prices in
the near term, said a University of
Illinois Extension marketing specialist.
"Crop condition ratings and our crop weather model suggest that
the U.S. average yield could be a bushel above the USDA
projection if summer weather is near average and an early freeze
is avoided," said Darrel Good. ""The lateness of the crop and
extensive re-planting, however, make yield prospects very
uncertain.
"The USDA's yield estimate in the August Crop Production report
will be based on a very immature crop, but the acreage estimate
will be important."
Good's comments came as he reviewed corn and soybean prices.
Corn prices and, to a lesser extent, soybean prices have come
under pressure over the past two weeks. The weakness started
with the USDA's June Acreage report and continues as production
prospects improve.
On July 11, the USDA released the monthly World Agricultural
Supply and Demand Estimates report.
"For corn, that report confirmed trends revealed in the June 30
Grain Stocks report and general trade expectations," said Good.
"The forecast of feed and residual use of corn during the
current marketing year was reduced by 100 million bushels,
reflecting the larger-than-expected June 1 inventory as well as
a 30-million-bushel increase in projected feed and residual use
of wheat this summer.
"The forecast of ethanol use of corn during the current year was
reduced by 50 million bushels and the projection of other
processing uses was reduced by 15 million bushels."
Despite a recent slowdown in weekly export inspections, the
projection of 2007-08 marketing year exports was unchanged at
2.45 billion bushels.
"The unchanged forecast likely reflects the fact that Census
Bureau export estimates through May exceeded the USDA's
cumulative export inspections by 65 million bushels," said Good.
"Sept. 1, 2008 stocks are projected at 1.598 billion bushels,
165 million above the June forecast."
For the 2008-09 marketing year, the U.S. average corn yield is
forecast at 148.4 bushels, based on a linear trend from 1990
through 2007 adjusted for late planting and emergence and a
smaller portion of harvested acreage in the Corn Belt.
"That forecast is 0.5 bushels below the June forecast," said
Good. "Production is forecast at 11.715 billion bushels.
Consumption forecasts were little changed from June with a
50-million-bushel increase in feed and residual use and a
65-million-bushel reduction in food and industrial use.
"Some believe that ethanol use of corn will not reach the USDA
projection of 3.95 billion bushels, but margins have improved
significantly as a result of the recent drop in corn prices.
Year-ending stocks are expected to be small at 833 million
bushels, but 160 million larger than forecast last month."
Generally favorable weather in recent weeks and a forecast of
needed precipitation in parts of the northern Corn Belt suggest
that corn production prospects are continuing to improve. Crop
condition ratings, along with our crop weather model, suggest
that the U.S. average yield could be two to three bushels above
the USDA forecast if at least average weather conditions
persist, Good added.
The first yield forecast based on producer surveys and field
observations will be released on Aug. 12.
"Crop maturity is late enough that yields will be difficult to
estimate," he noted. "However, the adjustments, if any, to
planted and harvested acreage estimates will be very important."
For soybeans, two changes were made in the projections of use
during the current marketing year.
"Exports are now projected at 1.145 billion bushels, 35 million
larger than the June projection," he said. "The larger
projection likely reflects the ongoing strong pace of shipments
and the fact that Census Bureau export estimates through May
exceed the USDA's cumulative export inspection estimate by 29
million bushels.
"The larger export projection was offset by a reduction in the
projection of residual use. That use is now projected at
minus-35 million bushels, further evidence that the 2007 crop
was underestimated."
For the 2008-09 marketing year, the U.S. average soybean yield
is projected at 41.6 bushels, based on 1989 through 2007
regional trend analysis adjusted for late planting and
emergence. That projection is 0.5 bushels below the June
forecast and, when coupled with fewer acres revealed in the June
Acreage report, results in a production forecast of three
billion bushels.
"That forecast is 105 million below the June forecast," he said.
"The projection of use during the 2008-09 marketing year was 67
million below the June forecast, but the projection of
year-ending stocks declined by 35 million bushels, to a total of
only 140 million bushels."
By Bob Sampson, University of
Illinois |
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