 "In the past, producers have been willing to plant corn 'late'
in the face of high prices," said Darrel Good. "In 1995 and
1996, for example, 90 and 75 percent of the crop, respectively,
was planted after May 1. Sixty and 45 percent of the crop,
respectively, was planted after May 15."With relatively high
soybean prices, producers may not be willing to plant corn as
late in 2008. Without an increase in acreage, the U.S. average
corn yield will have to be well above the trend to allow
consumption to continue at the current rate."
Good's comments came as he reviewed the corn market, where
prices dipped in the third week of March but recovered following
the USDA reports of March 31. The up trend that began in early
October 2007 is still in place. Last week, December 2008 futures
traded to a high of $6.285.
"On the demand side, the pace of exports and export sales
remain strong," he said. "The USDA's revised export projection
for the year of 2.5 billion bushels is 17.6 percent larger than
shipments during the 2006-07 marketing year. The USDA's weekly
report of export inspection showed 2007-08 cumulative inspection
of 1.568 billion bushels as of April 10, 19.9 percent larger
than the total of a year ago.
"The weekly Export Sales report showed shipments through
April 3 running 16.5 percent ahead of last year's total. Census
Bureau export estimates for the period September 2007 through
February 2008 exceeded USDA estimates by 40 to 50 million
bushels. All of that difference occurred in the first quarter of
the year."
Good added that the Census Bureau estimate of exports during
the first half of the 2007-08 marketing year exceeds the
year-ago total by 20.3 percent. As of April 3, the USDA reported
unshipped corn export sales of 594 million bushels, compared
with 403 million on the same date last year.
"The majority of that increase is to South Korea, reflecting
the lack of export supply from China," said Good. "Cumulative
shipments plus outstanding sales of U.S. corn to South Korea
stood at 324 million bushels on April 3, compared to 99 million
last year.
"It appears that exports of U.S. corn during the current
marketing year will exceed the current projection of 2.5 billion
bushels."
The USDA lowered the projection of corn used for ethanol
production during the current marketing year by 100 million
bushels, to a total of 3.1 billion bushels, due to a
slower-than-expected pace of new plant startups. As of April 2,
the Renewable Fuels Association reported 147 ethanol plants in
operation and 55 plants under construction.
"Operating margins of existing plants appear to be solidly in
the black, as higher prices for ethanol have offset the higher
prices of corn over the past two months," said Good. "The
average price of ethanol at Iowa plants was reported by the USDA
at $2.45 per gallon on April 11, $1.02 above the low established
in late September 2007.
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"High crude oil and gasoline prices should support ethanol prices
and the continued expansion of ethanol production."
Good noted that the magnitude of feed and residual use of corn
has been a little confusing over the past 18 months. Use was
estimated at 6.157 billion bushels in 2004-05 (68.4 bushels per
animal unit) and 6.155 billion in 2005-06 (67.6 bushels per animal
unit), but declined to an estimated 5.598 billion bushels last year
(60.7 bushels per animal unit).
In November 2007, USDA projected use during the current year at
5.65 billion bushels. Following a much smaller-than-expected corn
stocks estimate for Dec. 1, 2007, and March 1, 2008, that projection
has now been increased to 6.15 billion bushels.
"The estimated decline in use last year was attributed to
increased wheat feeding and increased feeding of distillers grains,"
said Good. "The large apparent increase this year, however, suggests
that the 2006 U.S. corn crop may have been underestimated and the
2007 crop overestimated.
"The bottom line is that stocks of U.S. corn at the end of the
current marketing year will be much smaller than projected earlier.
The USDA's forecast of ending stocks has declined from 1.997 billion
bushels in October 2007 to 1.283 billion in April 2008."
On the supply side, there is now some concern about the size of
the 2008 corn crop.
"While prices never gave producers a signal to switch acreage
from corn to soybeans in 2008, they apparently reacted to high
soybean prices and higher fertilizer prices," said Good. "Planting
intentions reflect plans to reduce corn acreage by nearly 7.6
million acres and increase soybean acreage by nearly 11.2 million.
"But recent changes in price relationships reportedly have some
producers rethinking those intentions, with some now planning to
plant more corn."
[Text from file received
from the University
of Illinois College of Agricultural, Consumer and Environmental
Sciences]
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