 "With rising prices of other commodities and limited amounts of
uncultivated acreage available, it is difficult to see how such
an increase can occur," said Darrel Good. "The crop markets have
an interesting challenge ahead."With an increase in winter
wheat acreage likely already in place, prices of corn and
soybeans in particular may have to remain high relative to
alternative crops in order to ensure sufficient acreage in 2008.
In addition, average yields will have to remain high to generate
sufficient production."
Good's comments came as he reviewed 2008 projections. U.S.
crop producers made dramatic shifts in acreage in 2007, he
noted. Those shifts were motivated by rising corn-based ethanol
production and high corn prices, rising wheat prices and a
surplus of soybeans.
"The acreage shift was led by a 17-million-acre increase in
feed grains, including 15.3 million acres of corn," he said.
"Winter wheat acreage increased by about 3.1 million, and
harvested acreage of hay was up by nearly 1 million acres.
"Those increases were accommodated by an 11.9-million-acre
decline in soybean plantings, 1.3 million fewer acres of spring
wheat, 4.4 million fewer acres of cotton and about 900,000 fewer
acres devoted to other oilseeds -- edible beans, peas and
lentils -- and sugar beets."
In addition to the acreage shifts, total planted acreage
(harvested acreage of oats and hay) increased by 4 million
acres. The large increase in total acreage likely includes some
pasture acreage converted to row crops and perhaps an increase
in replanted acreage stemming from the spring freeze that
damaged the winter wheat crop.
Prices of corn, soybeans and wheat remain at very high
levels, he noted. World and U.S. inventories of wheat and
soybeans are expected to decline sharply during the current
marketing year. Demand for these crops remains very strong, and
South America made an insufficient soybean acreage response to
high prices.
"While world wheat acreage has -- or will -- likely increase
substantially in 2007 and 2008, the recovery in production is
being threatened by weather problems in the United States,
Argentina, India and Pakistan," he said. "Stocks of U.S. corn
are expected to increase modestly this year, but stocks in
Europe and China are expected to decline sharply. These
developments all point to the need for more acreage and
production of corn, soybeans and wheat in the United States in
2008."
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The USDA projects the consumption of U.S. corn during the current
marketing year at 12.69 billion bushels. Use during the 2008-09
marketing year will likely increase if supplies are adequate.
Domestic feed use of corn might decline modestly as the production
of distillers grains increases.
"U.S. corn exports are expected to remain strong as Chinese
exports continue to decline," he said. "Some recovery in world wheat
production, however, might result in some softness in demand for
U.S. corn.
"The major uncertainty centers around how rapidly corn-based
ethanol production will expand next year. Continued high crude oil
prices, a recovery in ethanol prices, additional legislative
mandates for biofuels and ongoing construction of new plants suggest
a significant increase in corn used for ethanol."
There may be a market for about 13.6 billion bushels of U.S. corn
during the 2008-09 marketing year, he added.
"With stocks at the end of the current year at 1.8 billion
bushels, the 2008 crop may have to be near 13.1 billion bushels to
meet market requirements," he said. "A trend yield of 151 bushels
would suggest that harvest acreage needs to be near 86.7 million
acres in 2008, 600,000 more than harvested in 2007."
The USDA projects consumption of U.S. soybeans during the current
marketing year at 2.988 billion bushels. Year-ending stocks are
projected at only 185 million bushels, providing no surplus for
consumption during the 2008-09 marketing year. With a large soybean
crop in South America in 2008 and 2009, exports of U.S. soybeans
might decline from the 995 million bushels projected for this year.
"Even so, consumption of U.S. soybeans in 2008-09 could be near
2.9 billion bushels," said Good. "That is 5.4 million acres more
than harvested last year."
The USDA projects consumption of U.S. wheat during the current
marketing year at 2.333 billion bushels. Year-ending stocks are
projected at only 280 million bushels, providing little surplus for
consumption next year. Use during the 2008-09 marketing year might
decline if world wheat production rebounds and U.S. exports decline
from the 1.175 billion bushels projected for this year.
"Still, a U.S. crop of about 2.2 billion bushels may be needed in
2008," said Good. "With an average yield of 42 bushels, a crop of
that size would require harvested acreage of about 52.4 million, 1.4
million more than harvested this year."
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental
Sciences] |
