"Corn and soybean prices moved higher following the reports,"
said Darrel Good. "The focus in the crop markets will now be
almost entirely on weather and crop conditions. Some
deterioration in conditions is expected, likely beginning this
Good's comments came as he reviewed the markets in the
wake of the USDA reports. The reports estimated that the June 1
inventory of U.S. corn was 4.363 billion bushels, about 40
million larger than the inventory of a year ago, but about as
"The stocks figure implies that feed and residual use of corn
during the first three quarters of the 2005-06 marketing year
totaled about 5.155 billion bushels, or 85.9 percent of the
USDA's projected total for the year," said Good. "Typically, use
during the first three quarters accounts for 84.2 percent of the
total, suggesting that use for the year will be 120 to 125
million bushels larger than the current USDA projection.
"Combined with a strong pace of exports, large domestic use
suggests that year-end stocks could be 150 million bushels below
the current projection of 2.176 billion bushels."
Planted acreage of corn in 2006 was reported at 79.366
million acres, 1.347 million more than March intentions but
generally less than expected by the market. Planted acreage is
2.393 million less than planted in 2005, and acreage expected to
be harvested for grain is down 3.016 million.
The largest year-over-year declines in corn acreage occurred
in Illinois, Indiana, Kansas, Missouri, Nebraska, Ohio and
Texas. Acreage increased sharply in North Dakota. Harvested
acreage of other feed grains -- sorghum, oats and barley -- is
expected to be down 614,000 acres, or 6 percent, from that of a
"With a trend yield of 149 bushels per acre, the 2006 corn
crop would total 10.74 billion bushels, 191 million larger than
projected from March planting intentions," said Good. "Much of
that increase, however, may be offset by a smaller level of
stocks at the beginning of the 2006-07 marketing year.
"In addition, the projection of feed and residual use of corn
during the year ahead may have to be increased. Stocks at the
end of the 2006-07 marketing year may be projected near 1.03
billion bushels, only 8.8 percent of annual consumption,
suggesting a 2006-07 marketing year average farm price near
$2.50. The market is trading near $2.60."
The June 1 inventory of soybeans was estimated at 990.1
million bushels. While that is a record inventory for the date
and about 290 million larger than stocks of a year ago, the
estimate is about 25 million less than expected.
"The smaller inventory means that 'residual' use of soybeans
during the past quarter was at the upper end of recent
experience," said Good. "Either the 2005 crop was slightly
overestimated, or the missing inventory will be found in
September. Both scenarios have been experienced in the past."
[to top of second column]
Planted acreage of soybeans in 2006 is estimated at 74.93
million, 2.788 million more than planted last year but 1.965 million
less than indicated in March. Significant year-over-year increases
in acreage occurred in most major producing states except Iowa, Ohio
and South Dakota.
Harvested acreage is projected at 73.935 million, 2.575 million
more than harvested last year. Harvested acreage of other oilseeds,
excluding cotton, is projected at 5 million acres, 1.5 million less
than harvested last year. Planted acreage of cotton is up 1.13
"With a trend yield of 40.7 bushels, the 2006 soybean crop would
total 3.009 billion bushels, about 70 million less than projected
from March planting intentions," said Good. "Even if stocks at the
beginning of the year are smaller than the 570 million currently
projected, the 2006 average yield would have to be well below trend
to threaten the current situation of surplus.
"A trend yield points to a 2006-07 marketing year average price
very near the $5.70 average expected for the current year. The
market is trading near $6.20."
June 1 marked the beginning of the 2006-07 marketing year for
wheat. Stocks on that date were estimated at 568 million bushels, 21
million more than projected in the USDA's monthly supply and demand
report of June 9.
"The larger estimate suggests a smaller feed and residual use
during the 2005-06 marketing year," said Good. "Planted acreage of
wheat was estimated at 57.873 million acres, 644,000 more than
planted in the previous year and 745,000 more than indicated in
Durum acreage, at 1.885 million, is 60,000 above March intentions
but 875,000 less than planted in 2005. Acreage of other spring wheat
was estimated at 14.595 million, 559,000 more than planted in 2005
and 606,000 above March intentions. Importantly, harvested acreage
of all wheat in 2006 is projected at 47.084 million, 3.035 million
less than harvested last year.
"The larger inventory of wheat at the beginning of the year and
increased spring wheat acreage means that stocks of wheat at the end
of the current marketing year could be about 60 million bushels
larger than projected by USDA on June 1," said Good. "Conversely,
the U.S. average yield could be as much as 1.2 bushels less than
projected to maintain year-ending stocks at the 416 million bushels
of Illinois College of Agricultural, Consumer and Environmental
Sciences news release]