"The forecasts were generally negative
for corn and wheat prices and somewhat positive for soybean prices,
at least in the short run," said Darrel Good, referring to the
USDA's Aug. 12 report on crop production and the monthly estimates
of world supply and demand prospects.
The 2004 U.S. corn crop is forecast at
10.923 billion bushels, nearly 150 million bushels larger than the
average trade guess and about 800 million larger than the record
harvest of 2003. The forecast reflects a national average yield of
148.9 bushels, 6.7 bushels above last year's record yield. The U.S.
average yield has been at or above trend value in eight of the past
"The USDA increased the projection of
the 2004 Chinese corn crop by nearly 200 million bushels, to a total
of 4.7 billion bushels," said Good. "That forecast is 165 million
bushels larger than the estimate of the 2003 harvest.
"Still, the USDA sees Chinese corn
exports declining from 315 million bushels this year to 160 million
in the coming year. Exports of U.S. corn are expected to increase
from 1.925 billion this year to 2.1 billion next year, about
offsetting the decline in Chinese exports."
Domestic use of corn is expected to
increase by 245 million bushels, or 3 percent, during the upcoming
year, including an increase of 170 million bushels in the amount of
corn used for ethanol production. Use of U.S. corn for all purposes
during the 2004-05 marketing year is projected at 10.72 billion
bushels, an increase of 420 million bushels from the record use
during the current marketing year.
Year-ending stocks of corn are
projected at 1.132 billion bushels, or 10.6 percent of consumption,
suggesting a 2004-05 marketing-year average farm price of $2.28 per
bushel. The USDA projects that price in a range of $2.05 to $2.45,
and the market is currently reflecting an average of $2.23 for the
"Marketing-year lows in cash prices are
expected to occur in the harvest window," said Good.
The 2004 U.S. wheat crop is estimated
at 2.123 billon bushels, 64 million larger than the July forecast,
reflecting a combination of a lower acreage and a higher yield
forecast. The USDA also lowered the projection of 2004-05
marketing-year wheat exports to 950 million bushels, down 25 million
from last month's projection and 209 million less than exported in
"The pace of U.S. wheat exports is
currently well above that of a year ago," said Good. "Export
inspections during the first 10 weeks of the marketing year are up
10 percent from inspections of a year ago, and total commitments as
of Aug. 5 were 18 percent larger than on the same date last year.
[to top of second column in
"The pace of exports is apparently
expected to slow significantly from the current pace in the face of
much larger wheat corps in the rest of the world. Foreign production
in 2004-05 is expected to be up 13 percent, led by much larger crops
in Europe and India and a modest increase in China."
Even though the U.S. wheat crop is 214
million bushels smaller than the 2003 crops, year-ending stocks are
expected to be slightly larger than stocks at the start of the year,
on June 1, 2004, Good added.
"The USDA projects the marketing-year
average price in a range of $2.95 to $3.55, compared to the average
of $3.40 for the 2003-04 marketing year," he said.
The 2004 U.S. soybean crop is projected
at 2.877 billion bushels, 459 million larger than the small crop of
2003 but about 90 million bushels less than the average trade guess.
The U.S. average yield is projected at 39.1 bushels, 5.7 bushels
above the poor performance of last year but below the 40-plus
bushels generally expected.
"Recent cool weather in most growing
areas, and the later maturing crops in northern growing areas,
suggests that considerable uncertainty about the actual size of the
2004 crop remains."
The USDA also repeated the forecast of
a 7 percent increase in South American soybean acreage and a 21
percent increase in South American soybean production in 2004-05. A
9 percent larger crop is also projected for China.
"Even with these increases, the USDA
expects U.S. soybean exports to increase by 40 million bushels
during the year ahead, to a total of 1.03 billion," said Good.
"China is expected to import, from all sources, 772 million bushels
of soybeans during the upcoming marketing year.
"That projection is 37 million smaller
than the last months' projection but 224 million larger than imports
of the current year and 58 million larger than record imports of two
The domestic crush of soybeans is
projected to increase by 110 million bushels from the low level of
the current year. Use for all purposes is projected at 2.798 billion
bushels, leaving year-end stocks of 190 million bushels, for a
stocks-to-use ratio of 6.8 percent.
"That ratio suggests a 2004-05
marketing-year average farm price of about $5.85," said Good. "The
USDA projects that price in a range of $5.40 to $6.40, and the
market is currently reflecting an average of about $5.74.
of cash prices will be influenced by subsequent U.S. crop forecasts
and by South American crop prospects."
of Illinois news release]