 "Until there is some evidence of a slowdown in use that reduces
the needed increase in acreage in 2008, however, prices are
likely to remain well-supported," said Darrel Good.Good's
comments came as he reviewed the corn and soybean markets, where
on a daily basis prices continue to be influenced by a large
number of factors. These include the traditional fundamental
factors of the rate of consumption and production prospects in
various parts of the world.
"In addition, prices have been impacted by such factors as
prospects for crude oil prices and U.S. and global economic
prospects," he said. "The latter are often referred to as
outside markets, but developments in these markets directly
impact the potential demand for corn and soybeans.
"The one constant so far in the 2007-08 marketing year for
both crops has been the generally persistent high rate of
consumption."
For soybeans, the USDA currently projects the 2007-08
marketing year domestic crush at 1.83 billion bushels, 1.3
percent larger than the record crush of last year. Through the
first four months of the marketing year (September through
December 2007), the Census Bureau estimates the domestic crush
at 629.84 million bushels, 2.2 percent larger than the
cumulative crush of a year ago.
"The year-over-year rate of increase slowed to only 0.4
percent in November but jumped to 3.3 percent in December," said
Good. "The higher rate of crush reflects an increase in both
domestic and export consumption of soybean meal.
"While soybean oil consumption is up, crush is still being
driven by demand for soybean meal. Domestic soybean oil stocks
at the end of December exceeded 3 billion pounds, only slightly
less than the record December inventory of a year ago."
Good said that if the current pace of crush persisted for the
remainder of the year, crush would reach 1.846 billion bushels,
16 million larger than the USDA projection. Some reduction in
hog numbers, an increase in distillers grain production and
seasonal competition from South American soybean meal may slow
the rate of increase in the domestic crush.
"Still, the crush during the last eight months of the year
needs to be only 0.9 percent larger than the crush of a year ago
to reach the USDA projection of 1.83 billion bushels," he added.
The USDA projects U.S. soybean exports during the current
marketing year at 995 million bushels, 11 percent below the
record exports of a year ago. Through the first 21 weeks of the
marketing year, the USDA export estimates indicate that
shipments were only 5 percent below those of a year ago. Through
the first three months of the year, however, Census Bureau
export estimates were 14 million bushels larger than USDA
estimates but 12.6 percent smaller than the cumulative Census
Bureau estimate of a year ago.
[to top of second column] |
"The current pace of shipments relative to that of a year ago
appears to be in line with the USDA projection for the year," said
Good. "The difference is in the magnitude of unshipped sales."
As of Jan. 17, the USDA reported unshipped sales of 297 million
bushels, 13.5 percent larger than unshipped sales of a year ago.
Japan, China and Mexico account for much of that increase. The
current pace of shipments and sales projects to a slightly higher
export total than projected by USDA. Chinese demand and the size of
the current South American harvest will influence U.S. exports
during the last half of the year.
For corn, the USDA projects 2007-08 marketing year exports at
2.45 billion bushels, 15.3 percent more than exported last year.
Through the first 21 weeks of the year, USDA estimates show a 16
percent increase in shipments.
However, through the first three months of the year, Census
Bureau export estimates exceeded USDA estimates by 45 million
bushels and were 17.6 percent above Census Bureau estimates of a
year ago.
"Unshipped export sales of U.S. corn as of Jan. 17 stood at 772.5
million bushels, 61 percent larger than unshipped sales of a year
ago," said Good. "Japan, South Korea, Taiwan, Egypt and Mexico
accounted for much of the increase. Increased Asian demand at least
partially reflects reduced exports from China.
"The current pace of export demand suggests that exports could
exceed the USDA projection for the year. The size of the current
South American harvest and the extent of the rebound in Northern
Hemisphere wheat production will influence demand for U.S. corn."
Domestic use of corn apparently totaled 3.417 billion bushels
during the first quarter of the 2007-08 marketing year, nearly 15
percent more than was consumed in the first quarter last year. The
increase reflects a 21 percent increase in processing uses of corn,
almost all for ethanol, and a 13 percent increase in feed and
residual use. The calculation of feed and residual use totaled 2.457
billion bushels, an increase of 281 million bushels from use of a
year ago.
"The large increase is surprising given the large increase in
feeding of both soybean meal and distillers grain," said Good. "The
March 1 Grain Stocks report will provide additional insight on feed
use. It may be that the 2007 crop was slightly overestimated."
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental
Sciences] |
