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[MARCH
16, 2004]
URBANA -- Given that the
record rate of consumption of U.S. corn is expected to continue, and
perhaps accelerate, in 2004-05, the 2004 U.S. corn crop needs to be
large. Similarly, the poor end to the South American soybean growing
season and the smaller-than-expected harvest there means the United
States needs to have a large soybean crop in 2004, said a University
of Illinois Extension marketing specialist.
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"U.S. soybean production would increase
sharply in 2004 with no change in acreage and a return to a trend
U.S. average yield," said Darrel Good. "However, a larger corn crop
will require additional acreage and at least a trend yield in 2004.
The March 31 USDA "Prospective Plantings" report will reveal how
producers are intending to respond to the need for large crops in
2004."
Good's comments came as he reviewed the
halfway point in both the 2003-04 corn and soybean marketing years,
which occurred on March 1. He noted that it is now the time of year
when both old crop and new crop factors can influence price
behavior.
"The market will continue to focus on
the rate of consumption of the 2003 crop but is also very interested
in prospects for the 2004 crops," he said. "The USDA's "Grain
Stocks" and "Prospective Plantings" reports to be released on March
31 will provide critical information about both of these factors."
The estimate of the March 1 corn and
soybean inventories will provide a measure of the rate of domestic
consumption of corn during the previous three months, indicate the
amount of corn and soybeans available for consumption between now
and the harvest of the new crop, and provide an indirect check on
the accuracy of the 2003 corn and soybean production estimates.
Anticipating the estimate of March 1
stocks of corn is complicated by the variation in the estimates of
the magnitude of exports to date, Good noted. Through January 2004,
cumulative Census Bureau export estimates totaled 820 million
bushels, while the two USDA estimates ranged from 794 million to 808
million bushels. The two USDA estimates placed February corn exports
at 142 million and 149 million bushels, respectively. Based on this
array of estimates, cumulative exports through February 2004 are
calculated at 965 million bushels, suggesting exports during the
second quarter of the year were at 490 million bushels.
"Domestic feed and residual use of corn is not measured but is
calculated based on the quarterly stocks estimates, so that
surprises can occur with the release of the stocks report," said
Good. "For the current year, the USDA projects a 3.6 percent
increase in feed and residual use of corn. If that rate of increase
was experienced during the first half of the marketing year, use
during the second quarter should have been near 1.515 billion
bushels.
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"Similarly, domestic
processing use of corn is projected to be 7.3 percent larger than
use of a year ago. If that rate of increase was experienced during
the first half of the year, use during the second quarter should
have been near 600 million bushels. These calculations suggest
second-quarter use of corn for all purposes at 2.605 billion bushels
and March 1 stocks near 5.34 billion bushels, about 200 million
larger than stocks on the same date last year. Stocks significantly
larger or smaller than this calculation could have important price
implications."
For soybeans, the
Census Bureau estimate of cumulative exports through January totaled
650 million bushels. The two USDA estimates were at 626 million and
642 million bushels, respectively. For February, the two USDA
estimates of exports were 84 million and 90 million bushels,
respectively, suggesting that cumulative exports through February
were near 736 million bushels. If so, second-quarter exports were
near 346 million bushels.
"The Census Bureau
estimate of the domestic soybean crush in December 2003 and January
2004 was about 1 million bushels more than the crush during the same
two months last year. The Census Bureau estimate for February is not
yet available, but the National Oilseed Processors' Association
estimate of the crush during February was 0.7 percent less than the
crush during February 2003," said Good. "If that ratio is also
reflected in the census estimate, the February 2004 crush was about
1 million less than during February 2003, suggesting second-quarter
crush this year totaled 422 million bushels, equal to the crush of
the same quarter last year.
"If seed, feed, and
residual use during the quarter was equal to the 66 million bushels
of a year ago, total use for the quarter totaled 834 million
bushels. March 1 soybean stocks, then, should have been near 852
million bushels, the smallest inventory for that date since 1984."
Good added that the level of stocks also
implies that the use of U.S. soybeans during the last half of the
marketing year will have to be 29 percent less than use during the
last half of the 2002-03 marketing year.
[University
of Illinois news release]
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