|
"Corn prices dropped sharply following the report, with December
2006 futures trading to a low of $2.3725 in the overnight market
of Aug. 13, fractionally above the contract low established
November 2005. Spot and harvest bids declined to near the
Commodity Credit Corporation loan rate in many markets," said
Darrel Good.
While the soybean production forecast was smaller than
expected, Good noted, spot cash prices dropped to the lowest
level of the marketing year in some areas, and November 2006
futures traded within 20 cents of the contract low established
in February 2005. Large old-crop supplies and prospects that the
surplus would continue for another year likely deflated
speculative interest in soybeans, he said.
Good said that the USDA's first forecast of the year placed
the corn crop at 10.976 billion bushels, reflecting a national
average yield of 152.2 bushels. "The forecast was 136 million
bushels smaller than the 2005 crop but about 150 million larger
than the average pre-report guess. The yield forecast is 4.3
bushels larger than the 2005 average and 8.2 bushels below the
record yield of 2004," he said.
Large year-over-year yield increases are expected in
Illinois, Indiana, Kentucky, Missouri and Ohio, Good said. The
Iowa yield is expected to equal that of last year, and lower
yields are expected in Kansas, Minnesota, North Dakota and South
Dakota. State yield prospects generally reflect the weekly
report of crop conditions.
The World Outlook Board did not change projections of corn
use for the current marketing year, although it appears that
exports will exceed the projection of 2.1 billion bushels, he
said.
"For the 2006-07 marketing year, the projection of domestic
feed and residual use of corn was increased by 75 million
bushels, and the projection of food and industrial use was
increased by 5 million bushels," Good said.
"The consumption of U.S. corn for all purposes during the
2006-07 marketing year is projected at a record 11.815 billion
bushels, 640 million above the projection for the current year,
leaving year-end stocks at 1.232 billion bushels. The projected
year-ending stocks-to-use ratio of 10.4 percent points to a
2006-07 marketing year average price of $2.35, equal to the
midpoint of the USDA's projected range of $2.15 to $2.55," he
added.
The forecast of the 2006 soybean crop came in at 2.928
billion bushels, 159 million smaller than the 2005 crop and
about 90 million less than the average pre-report guess, Good
said.
[to top of second column]
 |
 The U.S. average yield forecast of 39.6 bushels is 1.1 bushels
below the USDA's calculated trend value and 3.7 bushels below the
record yield of 2005, he said. Large year-over-year yield declines
are expected in the western Corn Belt, in the Plains states and in
some southern states. The average yield in Illinois is forecast to
be two bushels below the 2005 average, while the projections for
both Indiana and Ohio equal the 2005 averages.
"The World Outlook Board increased the projection of soybean
exports for the current marketing year by 25 million bushels and the
projection of the domestic crush by 5 million bushels. Still,
year-ending stocks are expected to be in surplus at 515 million
bushels, or 18.2 percent of consumption," Good said.
"Projections of soybean use for the 2006-07 marketing year were
essentially unchanged, totaling 2.996 billion bushels. Stocks of
U.S. soybeans on Sept. 1, 2007, are projected at 450 million
bushels, with the year-ending stocks-to-use ratio of 15 percent
suggesting a 2006-07 marketing year average farm price near $5.65 --
within the USDA's projected range of $5.00 to $6.00," he added.
The forecast production of all classes of wheat, at 1.801 billion
bushels, was only 5 million less than the July forecast, Good said.
Projections of use during the current marketing year were unchanged,
but the projection of the 2006-07 marketing year average farm price
was increased by 20 cents, in a range of $3.90 to $4.50.
"The higher price expectation likely reflects the outlook for a
much tighter world wheat-supply situation. Production forecasts were
lowered for Argentina, Canada and the European Union, while
forecasts were increased for Russia and the Ukraine," the specialist
said.
World wheat production is expected to be 3.3 percent less than
last year's crop, resulting in a decline in both consumption and
year-ending stocks, he said. Even so, wheat prices declined
following the new projections.
Good said that opinion seems to be divided on where subsequent
corn and soybean production forecasts will fall relative to the
August forecast. For corn, the prevailing attitude seemed to reflect
the adage that "big crops get bigger," he said.
"For soybeans, the private sector's expectations of crop size in
August have tended to be closer to the final USDA estimate than has
the August USDA forecast. If that tendency continues, a larger
forecast might be expected in subsequent reports," the specialist
said.
[University
of Illinois College of Agricultural, Consumer and Environmental
Sciences news release]
|
