December 2009 corn futures have increased by about 65 cents per
bushel from the early September low. November 2009 soybean
futures have rallied more than $1 per bushel from the low of
earlier this month.
"These higher corn and soybean prices have
come in the face of larger USDA crop forecasts," Good said.
In the Crop Production report released on Oct. 9, the USDA
forecast the 2009 corn harvest at 13.018 billion bushels, based
on conditions around the first of October. That forecast is 63
million bushels larger than the September forecast, reflecting
the potential for a record U.S. average yield of 164.2 bushels
The yield forecast is 2.3 bushels above the September
forecast, but the projection of harvested acreage was reduced by
713,000 acres. Acreage forecasts were reduced for a number of
states, but the largest reductions were for Illinois (300,000)
and Nebraska (250,000). The forecast of harvested acreage was
increased for Kansas (270,000) and Texas (150,000). The largest
month-over-month increase in state average yield forecasts was
for Nebraska, up nine bushels.
For soybeans, the 2009 harvest is now forecast at 3.25
billion bushels, about 5 million larger than the September
forecast. The U.S. average yield is forecast at 42.4 bushels,
0.1 bushel above the September forecast. The projection of
harvested acreage was reduced by 148,000 acres. The largest
changes were in Illinois (up 300,000 acres) and Iowa (down
"The U.S. corn yield forecast is about equal to the average
of a forecast based on crop condition ratings and a forecast
based on growing season weather. The U.S. soybean yield forecast
is still lower than the forecast based on crop condition ratings
and the forecast based on growing season weather," Good said.
In a more "typical" year, yield forecasts of both corn and
soybeans might be expected to increase in November.
"This, however, is not a typical year. Freezing temperatures
this past weekend likely ended the growing season for
late-maturing crops in northern and western growing areas before
full yield potential was reached. In addition, more widespread
incidence of disease in both crops may reduce yield and quality
potential. The November forecasts of yields are now more likely
to decline rather than increase," Good said.
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In addition to concerns about the size of the crops, prices have
been influenced by strong demand in some sectors.
"For corn, the ethanol industry has experienced a substantial
economic recovery. The economics of blending ethanol are very
favorable, increasing the demand for and price of ethanol. Even with
higher corn prices, ethanol production has moved solidly back into
the black," Good said.
"The USDA did not increase the forecast of corn use for ethanol
during the current marketing year, but many analysts believe there
is potential for use to exceed the projection of 4.2 billion
bushels. Part of that optimism may stem from the potential to export
The USDA did lower the projection of 2009-10 marketing year corn
exports by 50 million bushels but increased the feed and residual
component by 50 million bushels.
"The year-over-year increase of 169 million bushels in feed and
residual use appears generous in the face of declining livestock
numbers and a large increase in distillers grain production, even
with reduction in feed use of other grains. Still, year-ending
stocks of 1.672 billion bushels are not large and could be less if
the crop is smaller and ethanol use larger than projected," Good
For soybeans, the demand strength has been in the export sector.
The USDA now projects 2009-10 marketing year exports at a record
1.305 billion bushels, 25 million above both the September
projection and actual exports of last year.
"Soybean export sales have been very large to date. As of Oct. 1,
the USDA reported soybean exports plus outstanding sales at 758
million bushels, 350 million more than commitments of a year
earlier. China accounts for 61 percent of export sales to date. Like
corn, the projection of year-ending stocks of U.S. soybeans, at 230
million bushels, is not large and could be less if the crop is
smaller than currently projected," Good said.
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental