 "The USDA's quarterly Hogs and Pigs report, the quarterly Grain
Stocks report, and the annual Prospective Plantings report all
appeared to be supportive for corn prices," said Darrel Good.
"The Prospective Plantings report provides a benchmark for
anticipating actual planted acreage. Planting season weather and
changes in relative prices will be monitored closely for judging
changes from intentions. The big question is: Will corn
producers really leave so much money on the table?"
Good's comments came as he reviewed the three reports.
In the pork industry, the USDA reported that the U.S. winter
pig crop was 7 percent larger than the crop of a year ago,
compared with expectations of a 4.5 percent larger crop. A
year-over-year reduction in the number of sows farrowing is not
expected until the summer quarter of 2008.
"Large hog numbers bode well for feed demand, and that was
reflected in the March 1 corn inventory estimate," said Good.
"March 1 stocks were reported at 6.859 billion bushels, compared
to our projection of 7 billion and the average trade guess of
7.076 billion bushels.
"The March report follows a December stocks estimate that was
also considerably less than expected. The stocks estimates
suggest that feed and residual use of corn during the first half
of the 2007-08 marketing year was 12.8 percent larger than use
during the first half of the 2006-07 marketing year. These
comparisons suggest that either the 2006 crop may have been
underestimated or the 2007 crop may have been overestimated.
Regardless, current stocks are much smaller than expected."
Corn producers reported intentions to plant 86.014 million
acres of corn in 2008, 7.586 million fewer acres than planted
last year and 1.37 million less than expected.
"The intention to reduce corn acreage is widespread," he
noted.
Among the large producing states, acreage is expected to
increase only in Texas. Intended acreage is down 1 million acres
in Iowa, 800,000 in Indiana and 600,000 in Illinois.
"With an optimistic U.S. average yield of 155 bushels,
production in 2008 would project to about 12.2 billion bushels,"
said Good. "That is 755 million less than the projection of use
during the current marketing year. Use is expected to remain at
least that large in 2008-09."
Good observed that it appears intended acreage of corn is not
sufficient to supply the projected rate of consumption and
implies that corn prices will have to increase to slow
consumption or producers will have to plant more acreage than
intended.
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"Projected costs of production, trend yields and average overnight
harvest bids on March 28 indicated that corn production in Illinois
was potentially more profitable than soybean production by $125 to
$190 per acre, depending on the area of the state," he said.
"The margin increased another $50 per acre at the open of futures
trade on March 31."
On the surface, the March 1 stocks estimate and planting
intentions for soybeans appear to be negative for soybean prices,
even though those prices have declined sharply since the first of
March. March 1 stocks of soybeans were estimated at 1.428 billion
bushels, 76 million larger than the average trade guess.
"The stocks estimate implies that feed, seed and residual use of
soybeans during the first half of the year totaled only 45 million
bushels," said Good. "In the previous five years, use in that
category during the first half of the year ranged from 148 to 188
million bushels.
"The low number this year suggests that the 2007 crop may have
been underestimated."Soybean producers reported intentions to plant
74.793 million acres in 2008. That is 11.162 million more than
planted in 2007 and 3.27 million more than generally expected. The
planned increase in soybean acreage is widespread.
"Intentions exceeded last year's plantings by 1.25 million acres
in Iowa, 1.2 million in Nebraska, 900,000 in North Dakota, 850,000
in Minnesota, 800,000 in Indiana and 600,000 in four states,
including Illinois," he said. "If 74.8 million acres are planted,
harvested acreage might be near 73.8 million. With a national
average yield near 42.5 bushels, the 2008 crop would total about
3.14 billion bushels, 115 million more than the level of consumption
expected during the current marketing year.
"Current price relationships suggest that actual planted acreage
of soybeans in 2008 should fall short of intentions."
The USDA reported winter wheat seedings at about 46.84 million,
1.853 million more than planted last year and 230,000 more than
reported in January. Combined planting intentions for durum and
other spring wheat total 16.963 million, 1.517 million more than
planted last year.
"Intentions are to reduce sorghum acreage by 303,000 and cotton
acreage by 1.44 million," he said. "Acreage of oilseeds other than
soybeans is expected to increase by 118,000.
"Planted acreage for all crops included in the Prospective
Plantings report exceeds last year's planted acreage by about 4.8
million acres. Harvested acreage is expected to decline by 1.04
million."
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental
Sciences] |
