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"Corn production outside the United
States in 2003-04 is expected to be 900 million bushels, or 6.6
percent, less than during 2002-03," said Darrel Good. "Foreign
production of all coarse grains is expected to be down only 3.3
percent. As a result, world coarse grain consumption is expected to
expand by nearly 2 percent. Stocks of coarse grains will be drawn
down, but consumption will apparently not be restricted."
Good's comments came as he reviewed the
USDA's December updates of projections of U.S. and world supply and
consumption of grains and oilseeds, which contained some important
changes from the November projections.
"Changes on the supply side were
dominated by Argentina, where projections of production were lowered
for wheat, corn, soybeans and sunflowers," he said. "Production of
wheat and soybeans is still expected to exceed that of last year,
but corn and sunflower production is expected to be smaller than the
previous crops.
"The corn crop is projected at 530
million bushels, compared to a crop of 610 million bushels last
year. Soybean production is forecast at 1.34 billion bushels, up
from 1.3 billion produced last year."
The lower projection of wheat
production in Argentina was accompanied by a smaller projection for
the crop in the European Union, but those declines were more than
offset by larger projections for Canada, Australia and Iran. Still,
the 2003-04 world wheat crop is expected to be 3 percent smaller
than the crop of last year and 5 percent smaller than the crop of
two years ago.
World wheat consumption is expected to
exceed production by nearly 1.4 billion bushels, resulting in
another decline in world stocks.
For the United States, the USDA
increased the projection of exports for the current year by 25
million bushels, to an eight-year high of 1.1 billion bushels.
Through the first half of the year, U.S. wheat exports are lagging
the projected pace, but unshipped sales are large enough to make the
projection look reasonable. Year-ending (June 1, 2004) U.S. stocks
of wheat are projected at 583 million bushels, compared with stocks
of 491 million at the start of the year.
"The smaller soybean production
forecast for Argentina was not offset by increases for any other
producing country," Good noted. "The Brazilian crop is forecast at
2.2 billion bushels, about 275 million larger than last year's crop.
World production in 2003-04 is still expected to be 100 million
bushels larger than the 2002-03 crop despite a 300-million-bushel
decline in U.S. production.
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this article]
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"In addition, world production of other
oilseeds is still expected to exceed last year's production by 10
percent, led by a 17 percent increase in rapeseed production. World
soybean and total oilseed stocks are expected to remain large, even
with a 7 percent increase in world consumption."
The USDA made no changes in the
projection of use of U.S. soybeans during the 2003-04 marketing
year. Total use cannot exceed the current projections, due to
limited supplies, but some had anticipated a large export projection
and a smaller projection of domestic crush. Through the first
quarter of the year, USDA reports indicate that U.S. soybean exports
were about 7.6 percent larger than exports during the same period
last year. Exports for the year are projected to be down 14.8
percent.
"The Census Bureau estimates of exports
for September and October 2003 are 15 million bushels larger than
the USDA estimate," Good said. "As of Dec. 4, exports plus unshipped
sales were still 12.6 percent larger than the total of a year ago,
even after two consecutive weeks of modest sales."
Due to higher-than-expected prices to
date and indications that soybean use is still proceeding too
rapidly, the USDA increased the forecast of the marketing-year
average price by 15 cents per bushel. The average is expected to
fall in a range of $6.85 to $7.65.
"The pace of export sales and the
development of the South American crop will determine price behavior
over the next several weeks," said Good. "The market will be
especially sensitive to reports that monitor the development of
Asian rust in the Brazilian crop. Some are already beating the rust
drum pretty hard."
For the 2003-04 U.S. corn marketing
year, the USDA increased the forecast of corn exports by 50 million
bushels, to a three-year high of 1.925 billion bushels. That
projection is 21 percent larger than last year's exports. Shipments
during the first quarter of the year were about 20 percent larger
than last year's exports. As of Dec. 4, large unshipped sales put
total export commitments (shipments plus sales) 27.5 percent ahead
of last year's pace.
"The market
will continue to watch Chinese export activity for signs that U.S.
exports will differ from current projections," said Good.
"Widespread anticipation of reduced competition from China has
pushed cash corn prices to the highest level of the marketing year.
The USDA raised its forecast of the 2003-04 U.S. average farm price
by 10 cents per bushel, in a range of $2 to $2.40."
[University
of Illinois news release]
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