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"The USDA's January report will reflect
the final estimate of the size of the 2004 U.S. crops, the Dec. 1,
2004, estimate of U.S. stocks of grains and oilseeds, additional
export history, and further developments of the Southern Hemisphere
crops," said Darrel Good. "In addition, the wheat market could be
influenced by the estimate of U.S. winter wheat seedings. All of
these reports will be released on Jan. 12, 2005."
Good's comments came as he reviewed the
USDA's December report on estimates of world agricultural supply and
demand. It did not include any new production forecasts for the
major U.S. crops but provided an opportunity to reassess world
production prospects and to update forecasts of U.S. and world
consumption.
Released on Dec. 10, the report
contained relatively minor differences from the report released in
November, Good noted.
"For corn, the projection of corn
used for ethanol during the current marketing year was increased by
55 million bushels, but the projected use for other food and
industrial products was reduced by 30 million bushels," said Good.
"In addition, the projection of U.S. exports was reduced by 50
million bushels, to a total of 2 billion bushels. Year-ending stocks
are now projected at 1.844 billion bushels, 25 million larger than
the November projection.
"The U.S. average farm price for the
current marketing year is projected in a range of $1.70 to $2.10 per
bushel, the same as last month. Based on the average prices actually
received by farmers in September and October, the midmonth average
price in November, average monthly farmer marketing patterns, and
current futures prices for the remainder of the year, the average
price for the year would be at the very upper end of that range."
The USDA did increase the forecast
of current-year corn production for South Africa, the European
Union, Mexico, Canada and the former Soviet Union. As a result, the
projection of world year-ending stocks of corn was increased by 3
million tons, even though the projection of world corn consumption
was also increased by 3 million tons. For all coarse grain, the USDA
also raised the production forecast for China, reflecting a larger
crop of sorghum.
Good said the USDA made no changes
in the supply and consumption projections for the 2004-05 U.S.
soybean marketing year.
"However, the projection of average
soybean oil yield per bushel of soybeans processed was increased,
more than offsetting the 100-million-pound increase in projected
soybean oil exports," said Good. "Year-ending stocks of U.S. soybean
oil are now projected at 1.271 billion pounds, 84 million larger
than the November projection.
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"The average farm price of soybeans
for the 2004-05 marketing year is projected in a range of $4.60 to
$5.30, 10 cents narrower than last month's projection of $4.55 to
$5.35. Using the same procedure as described for corn, the current
market reflects a marketing-year average price near $5.25."
For the rest of the world, the USDA
increased the forecast of the size of the Chinese soybean crop by
500,000 tons, increased the projection of world consumption during
the current marketing year by 970,000 tons and reduced the
projection of world year-ending stocks by 830,000 tons.
"These stocks are still expected to
be extremely large, however, totaling 60.57 million tons," Good
noted.
In the case of wheat, the USDA
increased the projection of U.S. exports during the current
marketing year by 25 million bushels, reduced the projection of
domestic use for food items by 10 million bushels and reduced the
projection of year-ending stocks by 15 million bushels. The average
marketing-year farm price is still projected in a range of $3.20 to
$3.50 per bushel.
"For the rest of the world, the
largest changes included a 1.85-million-ton increase in the
projected size of the Canadian crop and a 1-million-ton reduction in
the projected size of the Australian crop," said Good. "World stocks
of wheat are expected to show the first year-over-year increase in
five years."
Good said the soybean market appears
to be the most interesting of the major crops. To date, prices have
remained much higher than anticipated, based on the large U.S. crop,
prospects for a large South American crop and prospects for a
significant increase in U.S. and world stocks.
"The presence of soybean rust,
however, has been reported early in the growing season in both
Brazil and Argentina," Good said. "In addition, the general thinking
is that soybean rust in the United States will lead to fewer acres
planted in 2005. On the demand side, China continues to buy large
quantities of U.S. soybeans.
"A tendency for soybean producers to
be tight holders of the stored crop has also resulted in
considerable strengthening of the basis. There is potential for wide
swings in soybean prices as the New Year unfolds."
[University
of Illinois news release]
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