July 12, 1999
USDA CROP REPORTS CONTAIN A FEW
On July 12, the USDA released its
monthly update of world supply and demand estimates and the monthly
crop production report. There were a number of changes from last
months reports, some that were not expected.
CORN. For the current
crop year, the USDA increased the projection of exports by 50
million bushels, lowered the projection of feed and residual use
by 50 million bushels, lowered the projection of food and industrial
use by 15 million, and increased the projection of year ending
stocks by 17 million bushels. Those stocks are projected at 1.744
Based on generally favorable growing
conditions and high crop ratings, the World Outlook Board raised
its estimate of the 1999 U.S. crop yield potential by 4 bushels
per acre. The projection of 135.8 bushels is only 2.8 bushels
below the 1994 record yield. Consumption of corn in the year ahead
is expected to increase by only 65 million bushels (food and industrial
use) and year ending stocks are expected to grow to 1.994 billion
bushels. The marketing year average price is expected to be in
a range of $1.65 to $2.05 per bushel.
The USDAs yield estimate appears
a little aggressive given the amount of the growing season left.
Conversely, the expectation of unchanged exports for the 1999-00
marketing year seems very conservative.
SOYBEANS. For the
current marketing year, the projection of exports was increased
by 15 million bushels, the projection of crush was increased by
20 million bushels, and the projection of year ending stocks declined
by 35 million bushels. While use has been running a little higher
than expected, the changes in this report exceeded expectations.
Year ending stocks will still be quite large at 395 million bushels.
Based on larger planted acreage
reported on June 30, the World Outlook Board increased its estimate
of 1999 production by 55 million bushels, to a total of 2.935
billion. The domestic crush is projected at 1.655 billion bushels,
75 million above the projection for this year and 20 million above
the projection of last month. The increase over this year is expected
to be driven by a 2 percent increase in domestic meal consumption
and a 22 percent increase in meal exports.
Soybean exports during the 1999-00
marketing year are projected at 930 million bushels, 18.5 percent
above the projection for the current year. The increase is expected
to be generated by a combination of low prices, increased imports
by China, and a smaller soybean crop in the rest of the world
in 1999-00. The foreign crop is expected to decline by 3.6 percent,
or 110 million bushels. The largest decline (7 percent) is expected
in Argentina. Low prices are expected to result in fewer acres
than planted last year in a number of areas.
Stocks at the end of the 1999-00
marketing year are projected at 590 million bushels, 5 million
below last months projection. The marketing year average
price is projected in a range of $3.90 to $4.70, compared to $5.00
for the current year. In contrast to corn projections, the projection
of soybean and soybean meal consumption for the year ahead are
WHEAT. The 1999 U.S.
wheat crop is now estimated at 2.333 billion bushels, 91 million
larger than the June projection and 217 million smaller than the
1998 harvest. The winter wheat production estimate stands at 1.673
billion bushels, reflecting a national average yield of 47 bushels.
That is 2.3 bushels above last months estimate and just
slightly above the 1998 average yield. Yields of the soft red
winter wheat crop are especially large, estimated at 61 bushels
in Illinois, 65 bushels in Indiana, and 66 bushels in Ohio.
Durum wheat production is estimated
at 132.3 million bushels, 6 percent smaller than last years
crop. Harvested acreage is expected to be larger, but the average
yield estimate is 5.1 bushels below last years yield. Production
of other spring wheat is estimated at 527.5 million bushels almost
identical to last years crop. Acreage is down by nearly
200,000, but the average yield is projected to be 0.4 bushels
higher, at 35.3 bushels.
Even with beginning stocks less
than projected last months (24 million bushels) and a larger projection
of feed and residual use (25 million) the larger crop estimate
results in a larger projection of year ending stocks. Those stocks
are projected at 913 million bushels, only 32 million less than
beginning stocks. The marketing year average price is projected
in a range of $2.45 to $2.95.
The rapid decline in crop prices
this month, coupled with an extended period of dry weather in
central Illinois and Indiana, suggest that prices will find some
support. A significant rally is not expected as long as crop ratings
remain favorable. The next check point is the August production
Issued by Darrel
University of Illinois