 "Within
that context, however, an increase in corn acreage may be
needed," said Darrel Good. "It appears that winter wheat
seedings, particularly of soft red winter wheat, have declined
from 2007 seedings. The USDA will provide an estimate of those
seedings on Jan. 12, 2009."If the market anticipates a return
to a trend soybean yield in 2009, an increase in soybean acreage
will not be required. It appears, then, that corn will not have
to compete directly with soybeans for acreage in 2009. That
acreage 'battle' in 2009 will be to keep acreage in crop
production and to accommodate a small increase in corn acreage."
Good's comments came as he reviewed the USDA's Dec. 11
reports of world supply and demand prospects, which were
generally viewed as negative for corn prices.
"Corn prices, however, increased by more than 40 cents
following the release of the new reports," Good noted.
For the current marketing year, the USDA increased the
estimated size of the Chinese corn crop by nearly 160 million
bushels. The projection of marketing year exports of Chinese
corn was not increased, but some believe China will export more
than the 20 million bushels currently projected by the USDA.
Year-ending stocks of corn outside of the United States are now
expected to about equal the stocks on hand at the beginning of
the year.
"For the United States, the USDA lowered the projection of
corn use for ethanol production by 300 million bushels,
reflecting lower gasoline prices and tighter processing
margins," said Good. "Ethanol production may not exceed the
mandated level in 2009.
"In addition, the forecast of marketing year exports was
reduced by 100 million bushels as a result of the slow start to
exports this year and the larger supplies of grain in the rest
of the world."
The reductions were only partly offset by an increase of 50
million bushels in projected feed and residual use of corn, he
added. That increase reflected prospects for reduced supplies of
distillers grains from the ethanol industry.
The first indication of the rate of feed and residual use
will come from the estimate of Dec. 1 inventories to be released
on Jan. 12.
"Use of U.S. corn during the current year is projected at
12.185 billion bushels, 588 million less than during the 2007-08
marketing year," he said. "Year-ending stocks are projected at a
comfortable 1.474 billion bushels, only 150 million less than
inventory at the start of the year.
"The new projects not only have implications for prices
during the current year, but are important for assessing acreage
needs in 2009."
[to top of second column] |
Corn acreage needs in 2009 are a function of expected year-ending
stocks, expected consumption next year, expected yield and an
assessment of minimum year-ending stocks in 2009-10.
Use in 2009-10 may increase to 12.8 billion bushels, reflecting
an increase in ethanol production to meet the higher mandate, a
rebound in exports and a small reduction in feed use.
"If the U.S. average yield is near 155 bushels and stock levels
can be reduced by 200 million bushels, 81.2 million acres of corn
will need to be harvested for grain in 2009," said Good. "That would
require planted acreage of about 88.3 million, 2.4 million more than
planted in 2008."
Corn prices moved higher following the report due to an increase
in crude oil prices and some private forecast that corn acreage will
decline in 2009.
"Such forecasts are obviously premature since relative prices in
early 2009 will determine corn planting intentions," said Good.
"Producers likely have more acreage flexibility in 2009 than in most
years since many have delayed fertilizer applications.
"Forecasts of reduced acreage, however, did draw attention to the
fact that corn prices had become undervalued relative to soybean
prices."
Good said that acreage decisions in 2009 will be especially
interesting. From 2006 to 2008, planted area of crop land in the
United States increased by 9 million acres, while harvested acreage
of hay declined by only about 500,000 acres.
"A portion of the increase in crop land came from expiring
Conservation Reserve Program contracts, but the majority reflected
the impact of high prices in drawing non-crop land acreage into
production.
"Unless price levels increase by early 2009, some of that acreage
may go back to previous uses."
He added that the USDA will release a Prospective Plantings
report on March 31, 2009.
"The most important number in that report will be the total
number of acres expected to be planted in 2009," he said.
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental
Sciences] |
