Weekly Outlook:

Crop reports

[November 11, 2008]  URBANA -- Stabilization of the financial markets and energy prices provides some support for corn and soybean prices now, but recovery in those markets will be required to fuel a meaningful post-harvest recovery for those crops, said a University of Illinois Extension marketing specialist.

"Final production estimates for U.S. corn and soybean crops will be released in January by the USDA," said Darrel Good. "Until then, prices will be influenced by the development of Southern Hemisphere crops; the pace of consumption; and general demand as reflected in the financial, currency and energy markets."

Good's comments came as he reviewed the USDA's final production forecasts for 2008 U.S. crops. The projections include a U.S. corn crop of 12.02 billion bushels and a soybean crop of 2.921 billion bushels. Those forecasts reflected U.S. average yields of 153.8 and 39.3 bushels, respectively.

"The forecast size of the corn crop is 13 million bushels smaller than the revised October projection and 46 million bushels smaller than the average trade guess," he said. "The average yield forecast is 0.1 bushel below the October forecast.

"The Illinois yield forecast is two bushels above the October forecast. At 179 bushels, the expected yield is only one bushel below the record yield of 2004. The forecast yield for Ohio is seven bushels below the October forecast."

For the corn supply-and-demand balance sheet, some revisions were made in both the 2007-08 estimates and the 2008-09 projections. For last year, the estimate of the amount of corn used for ethanol was increased by 26 million bushels, offset with a 25-million-bushel reduction in the estimate of feed use.

"For the current year, the projection of exports was reduced by 50 million bushels, to only 1.9 billion," Good said. "That forecast is 536 million, or 22 percent, below the record exports of last year. The lower projection reflects the sluggish pace of exports and export sales experienced so far this year and the large grain crops outside the United States.

"Cumulative U.S. corn export inspections through Nov. 6 were 36 percent smaller than shipments of a year ago, while unshipped sales as of Oct. 30 were 43 percent smaller than outstanding sales of a year earlier."

Coarse grain production outside the United States is now projected at a record 767.9 million tons, which is 2 million tons larger than the October forecast and 41 million tons larger than last year's production.

Wheat production outside the United States is projected at 614.3 million tons, which is 2.2 million tons larger than the October forecast and 60 million tons larger than last year's production.

Stocks of U.S. corn at the end of the current marketing year are projected at 1.124 billion bushels, which is 500 million less than the inventory on Sept. 1, 2008, but 36 million larger than the October forecast. The 2008-09 U.S. average farm price is forecast in a range of $4 to $4.80, compared with the average of $4.20 received for the 2007 crop.

The forecast size of the 2008 U.S. soybean crop is 17 million bushels smaller than the October forecast and about 5 million larger than the average pre-report guess, Good noted.

The U.S. average yield forecast is 0.2 bushel below the October forecast and the lowest yield in five years. The Illinois average yield forecast was increased by one bushel from the October forecast, to 46 bushels, while the Indiana forecast was increased by two bushels, to 44 bushels. Yield forecasts were lowered by one bushel in Minnesota and Nebraska; by two bushels in North Dakota, Ohio and Wisconsin; and three bushels in South Dakota.

"The USDA's projection of the 2008-09 domestic soybean crush was reduced by 15 million bushels, resulting in an unchanged forecast of year-ending stocks," he said. "The projection of marketing year exports was left unchanged at 1.02 billion bushels despite the fast start to the 2008-09 export program. The projection is 12 percent smaller than the record shipments of a year ago.

"Through the first 9.5 weeks of the year, export inspections were about 3 percent larger than those of a year ago."

Unshipped sales as of Oct. 30 were 27 percent larger than the outstanding sales of a year earlier. The forecast size of the 2009 Brazilian soybean crop was reduced by 92 million bushels. That is about 37 million less than the 2008 harvest.

The projection of Brazilian soybean exports during the current marketing year was reduced by 55 million bushels. Argentine production in 2009 is still projected to be 158 million bushels larger than in 2008. The projection of 2008-09 Argentine soybean exports was increased by about 30 million bushels from the October projection.

"The 2008-09 U.S. average farm price of soybeans is now projected in a range of $9.10 to $10.60, 60 cents lower than the October projection," Good said. "The average price received last year was $10.10."

[Text from file received from the University of Illinois College of Agricultural, Consumer and Environmental Sciences]