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"Use this year will be near 10.9 billion bushels and could
expand to 11.5 billion next year," said Darrel Good. "It appears
that U.S. corn stocks at the end of the 2006-07 marketing year
could be reduced to about 1.75 billion bushels, under current
production and consumption expectations. "An inventory at that
level would project to a 2006-07 marketing-year average farm
price of about $2.15 per bushel. The futures market currently
reflects a 2006-07 marketing-year average farm price of about
$2.50."
Good's comments came as he reviewed a recent USDA report
which, as expected, increased the forecast of 2005-06
marketing-year exports of corn. U.S. exports are now projected
at 1.9 billion bushels, 50 million more than projected last
month and 86 million more than exported last year.
"Based on large weekly export sales since the second week of
January, some had expected the USDA to increase the export
projection by more than 50 million bushels," said Good. "Export
sales during the eight weeks ended March 2 totaled 437 million
bushels. Sales during that eight-week period last year totaled
only 246 million bushels. Based on the USDA's weekly export
sales report, U.S. export commitments for the 2005-06 marketing
year totaled 1.326 billion bushels as of March 2.
"Of that total, 364 million bushels had not yet been shipped.
The total is 135 million larger than commitments of a year ago,
and unshipped sales are up 98 million bushels."
Good noted, however, that USDA estimates of exports are not
the estimates that are ultimately reflected in the
marketing-year supply and consumption balances published by the
USDA. Census Bureau figures are used as the official estimates.
"For the 2005-06 marketing year, Census Bureau export
estimates are available through January 2006, the first five
months of the year," said Good. "While USDA estimates indicated
that cumulative exports through January were 6 million bushels
larger than the total of last year, Census Bureau figures
indicated that the cumulative total was 8 million bushels
smaller than that of a year ago.
"The difference of 14 million bushels is not large but may be
one reason that the USDA did not increase the marketing-year
total as much as expected. Still, the robust pace of export
sales suggests that exports for the year might still exceed 1.9
billion bushels by 20 or 25 million bushels."
The pace of domestic consumption of corn during the second
quarter of the 2005-06 marketing year (December 2005 through
February 2006) will be revealed in the USDA's March 1 grain
stocks report, to be released on March 31.
"The quarterly pattern of feed and residual use of corn is
not consistent from year to year," Good pointed out. "Last year,
for example, 61.55 percent of the total feed and residual use
for the year occurred in the first half of the year. In the four
years prior to that, first-half use as a percentage of the total
for the year was in a very narrow range of 63.7 to 64.5 percent.
The average for those four years was 64 percent.
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 "If use this year is following a 'typical' pattern and use is on
track to reach the USDA projection of 6 billion bushels for the
year, use during the second quarter should have been near 1.6
billion bushels, about equal to that of a year ago."
The quarterly pattern of domestic processing uses of corn is much
more consistent than the quarterly pattern of feed and residual use.
Over the past five years, use during the first half of the marketing
year has ranged from 47.2 percent to 47.7 percent of the total for
the year. The average was 47.5 percent.
"If use this year is following a normal seasonal pattern and use
is on track for reaching the USDA projection of 2.985 billion
bushels, use during the second quarter should have totaled about 727
million bushels, 90 million more than during the same quarter last
year," said Good.
Based on Census Bureau estimates through January and the USDA
export sales reports for February, second-quarter corn exports were
likely near 485 million bushels. Based on USDA projections of use
for the year and assuming typical seasonal consumption patterns, use
for all purposes during the quarter should have been near 2.812
billion bushels. Use at that level projects to March 1 U.S. corn
stocks of about 7 billion bushels, about 240 million larger than the
inventory of a year ago.
Good said the USDA will release its annual prospective plantings
report on March 31.
"Most private analysts are forecasting a significant increase in
total planted acreage of all crops in 2006 compared to plantings in
2005," said Good. "Expectations for corn, however, are for a
marginal decline in acreage. Those expectations seem to be centering
on a decline of 1.5 to 1.7 million acres, or about 2 percent.
"Planted acreage of wheat, cotton and especially soybeans is
expected to exceed acreage planted in 2005. As pointed out before,
with such a large surplus of soybeans in the United States and the
world, it is a little surprising that the markets are not
aggressively discouraging an increase in soybean acreage."
Good said that if 80.1 million acres of corn are planted in 2006,
about 72.8 million acres would likely be harvested for grain.
"A trend yield near 150 bushels, then, would produce a 2006 crop
of 10.92 billion bushels," he said.
[University
of Illinois College of Agricultural, Consumer and Environmental
Sciences news release]
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