Smaller corn crop confirmed
The 2011 U.S. soybean crop is forecast at 3.085 billion bushels, 244 million smaller than the 2010 crop, but 29 million larger than the August forecast, he said.
The USDA's September World Agricultural Supply and Demand Estimates (WASDE) report reflected an increase of 5 million bushels in the projection of the domestic soybean crush during the year ended Aug. 31, 2011, Good said.
"For the current year, the projection of U.S. exports was increased by 15 million bushels. Stocks of U.S. soybeans are expected to total 225 million bushels on Sept. 1, 2011, and 165 million on Sept. 1, 2012," he said.
The 2011-12 marketing year average farm price is projected in a range of $12.65 to $14.65, 15 cents higher than the August forecast and well above the $11.35 average of the past year, he noted.
The forecast of 2011-12 foreign soybean production was increased marginally (0.4 percent), as was the projection of year-ending stocks outside the United States. Those stocks, however, are expected to be smaller than at the beginning of the year, he said.
"For wheat, the USDA increased the forecast size of the 2011-12 crops for Canada, the European Union, and the Ukraine. World ending stocks are projected to be larger than forecast last month and slightly larger than stocks at the beginning of the year," he said.
For the United States, the projection of food use of wheat during the current marketing year was reduced by 5 million bushels, and the projection of exports was reduced by 75 million bushels.
Year-ending stocks are projected at 761 million bushels, 90 million larger than projected last month, but 100 million smaller than stocks at the start of the year. The 2011-12 marketing year average farm price is projected in a range of $7.35 to $8.35, well above the $5.70 average of the previous year, the expert said.
"Taken together, the September USDA reports are negative for near-term soybean and wheat price prospects. Many observers, however, believe the soybean production forecast will be reduced in October," he said.
Good said that the reports were generally supportive for corn prices. Some analysts interpreted the USDA's sharp reduction in the forecast of corn consumption as a sign of significant demand weakness, he said.
"The reduction, however, was more a statement of availability. Some corn demand weakness is anticipated in 2012, but for now, prices will have to stay high in order to trim consumption. There is also some expectation that the October production forecast will be slightly smaller than the September forecast," he said.
Source: Darrel Good