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"Fundamental factors are even more negative now," said Darrel
Good. "While soybean prices have declined about 60 cents since
Jan. 4, additional declines might be expected unless the South
American crop comes under significant stress. "However, prices
of both corn and soybeans are expected to become more volatile
in the spring, offering another pricing opportunity."
Good's comments came as he reviewed a number of USDA reports
released on Jan. 12 that were relative to the current and
prospective supplies of corn and soybeans. Those reports
confirmed large supplies and were generally negative for price
prospects.
The 2005 U.S. corn crop is now estimated at 11.112 billion
bushels, 80 million larger than the November forecast. At 147.9
bushels, the U.S. average yield estimate is 0.5 bushels below
the November forecast, but the estimate of harvested acreage is
774,000 above the November forecast.
Stocks of corn on Dec. 1, 2005, were estimated at 9.813
billion bushels, 361 million larger than stocks of a year
earlier. Dec. 1 stocks were second in size to the 10.3 billion
of 1986. Consumption of corn during the first quarter of the
2005-06 marketing year was a record 3.417 billion bushels, 105
million more than consumption of a year ago. Exports during the
quarter were off 15 million from the previous year, but domestic
processing use of corn was up about 65 million and feed and
residual use was up by 55 million bushels.
"The calculation of first-quarter feed and residual use of
2.227 billion bushels exceeded expectations and prompted the
USDA to raise the forecast of use for the year by 125 million
bushels, to a total of 6 billion," said Good. "The slow start to
the export program this year resulted in a 50-million-bushel
reduction in the projection of exports for the year. At 1.85
billion bushels, the projected level of exports is only 36
million above the disappointing exports of last year.
"The estimated size of the 2005 Chinese corn crop was
increased by nearly 160 million bushels -- 3 percent, but the
larger crop is expected to lead to larger year-ending stocks,
not larger exports than projected last month. Year-ending stocks
of U.S. corn are now projected at 2.426 billion bushels, only 7
million above the December projection but still the largest in
18 years."
The 2005 U.S. soybean crop is estimated at 3.086 billion
bushels, 43 million larger than the November forecast and only
38 million less than the record crop of 2004. The U.S. average
yield is estimated at a record 43.3 bushels, 0.6 bushels above
the November forecast and 1.1 bushels above the record
established last year.
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Stocks of soybeans on Dec. 1, 2005, were estimated at a record 2.5
billion bushels, nearly 200 million above the inventory of a year
ago. Consumption of U.S. soybeans during the first quarter of the
2005-06 marketing year totaled only 840 million bushels, 92 million
less than consumption during the same quarter last year. Compared to
last year's use, the domestic crush during the quarter was up 15
million, and feed and residual use was down 17 million bushels.
Exports during the quarter totaled only 316 million bushels, 90
million less than shipments of a year ago.
"Based on the poor performance during the first quarter and the
modest level of current unshipped sales, the USDA reduced the
projection of marketing-year soybean exports by 70 million bushels,"
said Good. "At 950 million, the export projection is 153 million
bushels below last year's record shipments. The projection of the
domestic crush during the current marketing year was increased by 10
million bushels. At 1.73 billion, the projection is 34 million
bushels larger than the crush of a year ago.
"The larger crush is being driven by an increase in domestic meal
consumption and a lower yield of meal per bushel of soybeans. The
oil yield from the 2005 crop is record-large, resulting in a
forecast of a sharp increase in domestic soybean oil stocks by year
end."
Good added that year-end stocks of soybeans are also expected to
be much larger than in recent history. At 505 million bushels, the
projection of year-ending stocks is 100 million above the December
projection and the second-largest on record. Stocks were
record-large in 1986, totaling 536 million bushels at year end.
The USDA increased the estimates of soybean production and stocks
in Brazil for the 2004 and 2005 crops, resulting in a larger
projection of year-ending stocks in 2006 even though the 2006
production estimate was not changed.
"World stocks of soybeans are expected to increase to a record
1.95 billion bushels, about 300 million larger than the inventory at
the start of the year," said Good.
[University
of Illinois College of Agricultural, Consumer and Environmental
Sciences news release]
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