"Still, large daily price movements can be expected," said
Good's comments came as he reviewed recent corn
and soybean price patterns. December 2008 corn futures increased
about $2 per bushel during the month of June, topping out just
under $8. During the same period, November 2008 soybean futures
rallied more than $3, topping out just under $16.37.
"Much of the June rally was related to weather conditions in
the United States, as excessive rainfall threatened acreage and
yield in a wide area over the Midwest," he said. "That weather
pattern followed a generally wet, cool May that resulted in late
planting and slow emergence in some areas.
"Soybean prices were also supported by a generally strong
USDA export estimates indicate that soybean exports during
June totaled about 57 million bushels, compared with about 45
million in June 2007. Continued strong demand by China and
interruptions in exports from Argentina contributed to the large
"Prices of both crops turned lower in July," Good noted.
"Corn prices have been pressured by a combination of
larger-than-expected acreage estimates released by the USDA on
June 30, improving crop conditions and lower crude oil prices.
"As of July 13, the USDA estimated that 64 percent of the
corn crop was in good or excellent condition -- equal to the
rating of a year ago. Lower crude oil prices have resulted in
lower prices for ethanol. The average price of ethanol at Iowa
plants declined from $2.82 per gallon on July 3 to $2.57 per
gallon on July 18. At the close of overnight trade on July 21,
December 2008 corn futures settled $1.74 below the contract
Good said that soybean prices have not declined as sharply as
"While December 2008 futures are down by more than 20 percent
from the contract high, November 2008 soybean futures, at
$14.40, are down 12 percent from the contract high," he said.
"Soybean prices have been a little more resilient because of the
uncertainty about Argentine exports and because of more concern
about U.S. crop conditions.
"As of July 13, the USDA estimated that 59 percent of the
U.S. crop was in good or excellent condition, compared to 62
percent in those categories a year earlier. While crop condition
ratings are not much different than is typical for this time of
year, the lateness of the crop and continuing dry weather in the
Delta has created uncertainty about production prospects."
The same factors that have been contributing to the extreme
price moves of the past four months will continue to be
important for corn and soybean prices for the next two months,
[to top of second column]
"On the demand side, there are indications that Argentine export
activity could return to a more normal state, and U.S. soybean
exports have slowed in July," he said. "After adjusting for larger
Census Bureau estimates compared to USDA estimates, shipments during
the last 6.5 weeks of the marketing year will need to average 10
million bushels per week to reach the USDA forecast of 1.145 billion
for the year.
"The average over the three weeks ended July 17 was 7.7 million,
although the estimate for the week ended July 17 is subject to
For corn, the drop in ethanol prices over the past two weeks has
been more than offset by the decline in corn prices, he noted.
"Spot cash prices for corn, ethanol and distillers grain suggest
that the current gross crush margin is at the high end of the
margins experienced over the past 11 months," he said. "Corn
consumption for ethanol should continue to increase as forecast as
corn prices follow crude oil prices."
At the top of the list of price factors is the production
potential of the 2008 U.S. crops. While crop ratings generally
support yield prospects at or above trend values, the lateness of
the crop will be a lingering concern.
As of July 13, only 13 percent of the corn crop was in the silk
stage, compared with 50 percent on the same date last year and the
five-year average of 36 percent.
"Recent weather conditions, however, suggest that maturity will
progress rapidly," he said. "In addition, the Climate Prediction
Center outlook for August weather contained a generally favorable
outlook for the Midwest.
"As of July 13, 26 percent of the soybean crop was reported to be
in the bloom stage, compared to 54 percent on the same date last
year and the five-year average of 45 percent."
Another concern going forward is the generally dry pattern in the
Delta and Southeast and the Climate Prediction Center forecast of
above-average temperatures for that region in August. Rain chances
for that area in the near term are improving, depending to some
extent on hurricane activity.
"While yield uncertainty will persist, there is more than the
typical amount of uncertainty about corn and soybean acreage," Good
said. "The USDA will provide updated forecasts of planted and
harvested acreage, along with the first yield forecast of the
season, on Aug. 12."
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental