"Late corn planting suggests that planted acreage may not
significantly exceed producer intentions of only 86 million
acres," said Darrel Good. "Based on an analysis of trend yields
since 1990, and adjusting for 2008 planting progress, the USDA
forecast the 2008 yield at 153.9 bushels. That projection is
above those based on a longer trend and appears a little
"Stocks of U.S. corn at the end of the 2008-09
marketing year are projected at only 763 million bushels, or 6
percent of projected use. On the demand side, the biggest
question may be about likely feed and residual use of corn."
Use during the 2008-09 marketing year is projected at 5.3
billion bushels, 850 million less than projected for the current
year but only 298 million less than used in 2006-07.
"The wide swing in use the past two years means there is some
uncertainty about the size of the feed demand base," he said.
"How much reduction is really required and how much livestock
liquidation has already started? Price behavior following the
release of the USDA report suggests that the market believes
that much of the needed rationing of use is already under way."
Good's comments came as he reviewed the releases Friday of
USDA updated projections for the 2007-08 U.S. and world crop
supply, consumption, and price and made first projections for
the 2008-09 marketing year.
For soybeans, the USDA sees a sharp increase in the size of
the U.S. crop in 2008, a continuation of very strong demand for
U.S soybeans, a very modest buildup in U.S. inventories from the
extremely low level expected this year and a continuation of
"The average price received by U.S. producers for the 2008
crop is forecast in a range of $10.50 to $12, compared to $10
for the 2007 crop," said Good. "Supply and consumption forecast
for 2008-09 were not made for the rest of the world."
For corn, the USDA expects a much smaller U.S. crop in 2008,
a larger crop in other parts of the world, a substantial decline
in U.S. exports and domestic feeding during the 2008-09
marketing year, a large increase in domestic use of corn for
ethanol production, a large decline in U.S. inventories, and a
continuation of high prices.
The average price received by producers for the 2008 crop is
forecast in a range of $5 to $6, compared with a range of $4.10
to $4.40 for the 2007 crop.
"Since it is still very early in the 2008-09 growing season
and since U.S. corn planting has been generally slow, a lot of
uncertainty surrounds the USDA projections for the upcoming
marketing year," said Good. "This uncertainty is revealed in the
futures market, where prices for the 2008 crops of wheat,
soybeans and corn all exceed the price implied by the upper end
of the average farm price projected by the USDA.
[to top of second column]
"Most of the uncertainty lies on the supply side of the projections,
but there are also numerous issues surrounding demand prospects."
For wheat, much of the projection uncertainty involves the
Australian crop, which is currently being planted. Following two
years of drought and small crops, expectations are for a significant
rebound in Australian production and a doubling of exports. Dry
weather, however, is still of some concern in eastern production
Large increases in production are also expected in Europe and the
Ukraine, where weather issues are minimal at this time.
In the case of soybeans, U.S. production prospects are clouded by
both acreage and yield uncertainty. Continued delays in planting
corn could add to the already large increase planned for soybean
acreage, while delayed planting of soybeans might also lead to
concerns about 2008 yield prospects.
Based on an analysis of regional trend yields since 1989, the
USDA projects an average U.S. yield of 42.1 bushels in 2008. That is
0.9 bushels above the 2007 average and 0.9 bushels below the record
yield of 2005. Exports of U.S. soybeans are expected to remain large
in 2008-09, presumably due to a continuation of strong demand from
"The size of the 2009 South American crop will have some
influence on demand for U.S. soybeans as well," said Good. "The
domestic crush of soybeans is expected to increase to a new record
level in 2008-09, driven by increasing domestic use of soybean meal.
"The projected increase in domestic meal use is in contrast to
the decline projected for grain feeding and is very dependent on the
rate of expansion in broiler production, projected at 0.8 percent in
2009, and the rate of decline in pork production, projected at 2.4
percent in 2009."
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental