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"Corn prices made that recovery early on July 5," said Darrel
Good. "Crop condition rating may have to decline significantly
to justify prices above recent highs." Good's comments came as
he reviewed the USDA's June report on acreage. The report
indicated that crop acreage is down again in 2005. Acreage of
all principal crops is reported at 320.2 million, down from
322.3 million in 2004 and 325.7 million in 2003.
"Compared to planted area of a year ago, acreage declines
totaled 111,000 for feed grains, 204,500 for oilseeds, 1.6
million for wheat and 193,000 for hay," said Good. "Planted area
of cotton is up 367,000 acres. Compared to March planting
intentions, the area of principal crops is down nearly 1.2
million acres.
"The largest declines are for soybeans at 607,000, wheat at
512,000 and sorghum at 387,000. Planted acreage of corn is
179,000 larger than March intentions, and planted acreage of
cotton is 211,000 larger than March intentions."
Good noted that the increase in corn acreage was less than
expected, as fewer acres were switched from soybeans to corn.
The larger decline in soybean acreage reflects unplanted area.
"While planted acreage of soybeans is 1.905 million less than
planted in 2004, the USDA projects that harvested acreage, at
72.384 million, will be only 1.574 million less than harvested
last year," said Good. "Unharvested area is projected at only
919,000 acres, well below the five-year average of 1.32 million
but about equal to that of 2003.
"Planted acreage of corn, at 81.592 million, is 662,000 more
than planted last year and the most area planted to corn since
1985. Acreage exceeded 84 million in 1976, 1977, 1980 and 1981.
Acreage of corn harvested for grain in 2005 is projected at
74.368 million, 736,000 more than harvested in 2004 and only
156,000 less than the record acreage of 1981."
The June 1 inventory of soybeans was estimated at 699.6
million bushels, slightly less than the average pre-report
estimate. The stocks estimate implies that residual use of
soybeans remained large in the third quarter of the year.
Based on the Census Bureau estimate of crush and an estimate
of exports based on USDA reports, seed and residual use of
soybeans during the March-May quarter totaled 37.4 million
bushels. The total use in that category to date is 241.3 million
bushels.
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"Estimated use is typically negative for the final quarter of the
year," said Good. "Use will have to be minus 88.3 million bushels
during the final quarter if use for the year is to match the USDA
projection for the year of 153 million bushels. Use during the final
quarter last year was estimated at minus 74 million, a record-large
negative use for the quarter. The average for the prior four years
was minus 55.4 million bushels. The June 1 stocks estimate suggests
that the 2004 U.S. soybean crop may have been overestimated by 15 to
30 million bushels."
The June 1 inventory of corn was estimated at a 17-year high of
4.32 million bushels.
"However, the estimate was 50 to 100 million bushels less than
expected, implying a higher than projected rate of domestic use of
corn during the March-May quarter," said Good. "That use will likely
be assigned to the feed and residual category, but it is not known
whether the large use reflects a higher rate of feeding or an
overestimate of the 2004 crop. Whether the increase was actually fed
or was residual use will impact the forecast of use during the
2005-06 marketing year."
At the close of trade on July 1, the soybean futures market
reflected a 2005-06 marketing-year average farm price of about
$6.60. Using the USDA's projections of harvested acreage and
consumption during the 2005-06 marketing year, Good calculated that
the market was trading a 2005 average soybean yield of about 39.6
bushels per acre.
"That is slightly below the 39.9 bushel trend calculated by the
USDA and implies that by the end of the growing season only 51
percent of the crop will be rated in good or excellent condition,"
said Good. "For the week that ended June 26, the USDA reported 59
percent of the crop in good or excellent condition."
On July 1, the corn futures market reflected a 2005-06
marketing-year average price of about $2.25 per bushel. Again, using
the USDA's projections of harvested acreage and consumption during
the 2005-06 marketing year, the market appears to be trading a 2005
average corn yield of 143 bushels per acre.
"That yield is about two bushels below trend and five bushels
below the USDA projection made earlier this year," said Good. "A
yield of 143 bushels per acre implies that about 57 percent of the
crop will be rated in good or excellent condition by the end of the
growing season. For the week that ended June 26, the USDA estimated
that 65 percent of the crop was rated in good or excellent
condition."
[News release from the
University of Illinois College
of Agricultural, Consumer and Environmental Sciences] |
