 "Longer term, corn prices will likely recover, particularly in
relation to soybean prices, to ensure large acreage in the U.S
again in 2008," said Darrel Good.Good's comments came as he
reviewed the USDA's June 29 report of planted acreage. That
report provided some significant surprises.
"The report showed more acres of feed grains and fewer acres
of soybeans, cotton and spring wheat than had been anticipated,"
said Good.
Planted acreage of corn is estimated at 92.888 million acres,
2.434 million more than indicated in the March Prospective
Plantings report and 14.561 million more than planted in 2006.
Acreage exceeded intentions by 300,000 to 400,000 acres in
Illinois, Indiana, Iowa, Minnesota and Ohio. Planted acreage of
sorghum, at 7.765 million, is 656,000 above March intentions and
1.243 million more than planted in 2006.
The planted acreage report projected corn area harvested for
grain in 2007 at 85.418 million acres, 14.77 million more than
harvested in 2006.
"If the U.S. average yield is near the USDA's calculated
trend value of 150 bushels, the 2007 harvest could total 12.8
billion bushels," said Good. "A yield of only 152.2 bushels
would be required to produce a crop of 13 billion bushels.
"On June 11, the USDA projected that corn consumption during
the 2007-08 marketing year would total 12.456 billion bushels.
If the remainder of the 2007 growing season is favorable, the
crop will be large enough to result in some buildup in
inventories during the year ahead."
The June 1, 2007 inventory of corn was estimated at 3.534
billion bushels, about 80 million larger than expected.
"The larger estimate suggests that feed and residual use of
corn slowed substantially during the third quarter of the
marketing year," he noted. "Year-ending stocks may be above the
987 million bushels previously projected by the USDA. Those
stocks may be near 1.05 billion and could grow to near 1.4
billion bushels by Sept. 1, 2008, if the USDA's projection of
use is correct.
"Lower-than-expected corn prices, however, may lead to more
consumption than previously forecast. It is significant that the
corn market has moved from worrying about declining crop
conditions to anticipating a surplus, in a period of just two
weeks. December 2007 corn futures declined from a contract high
of $4.35 on June 18 to a settlement of $3.51 on June 29, trading
to the lowest level since mid-November 2006."
[to top of second column]
 |
 Planted acreage of soybeans is estimated at 64.801 million, 3.059
million less than indicated in March, 11.441 million less than the
record acreage of 2006 and the least since 1995. Compared to March
intentions, acreage declines were widespread, led by declines of
400,000 acres in Indiana, Iowa and Minnesota.
The USDA projects harvested acreage at 63.285 million. If the
2007 U.S. average yield is near the USDA's calculated trend value of
41.5 bushels, the 2007 crop would total 2.626 million bushels, 562
million less than the record crop of 2006.
Soybean inventories as of June 1, 2007 were estimated at 1.091
billion bushels, suggesting that use during the current year is
proceeding near the rate projected by the USDA. In its report of
June 11, the USDA projected use of soybeans during the 2007-08
marketing year at 3.039 billion bushels.
"With a crop of 2.626 billion bushels, use at that level would
result in the level of stocks declining from a projected 610 million
bushels on Sept. 1, 2007, to 200 million bushels on Sept. 1, 2008,"
said Good.
Area planted to cotton is estimated at 11.058 million acres,
1.089 million below March intentions and 4.216 less than planted in
2006. Acreage of spring wheat, including durum, is estimated at
15.369 million, 429,000 less than indicated in March and 1.4 million
less than seeded in 2006. Winter wheat acreage totaled 45.136
million, 4.561 million more than seeded for harvest in 2006.
"However, harvested acreage is expected to be 6.471 million more
than harvested last year, when drought conditions resulted in
significant abandonment of hard red winter acreage," he added.
While U.S. soybean inventories will be reduced dramatically
during the year ahead, rationing of use will not be required if the
average yield is near trend value or higher, said Good.
"The most important segment of the U.S. growing season is just
beginning, so that periods of crop concerns will likely occur, with
the focus now turning to a drier western Corn Belt," he said. "The
market will likely continue to offer producers very favorable
pricing opportunities for old- and new-crop soybeans during the next
several weeks.
"However, a continuation of futures prices above $9 will motivate
a large increase in soybean acreage in South America, opening the
door for a very large crop in 2008."
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental
Sciences]
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