April 2, 2001
USDA REPORTS HAD A FEW SURPRISES
The USDA's March 1 estimates of
corn and soybean stocks were marginally smaller than expected.
At 6.037 billion bushels, corn inventories were 432 million larger
than last year's stocks and the largest in 13 years, but about
30 million less than expected. While the difference is extremely
small, the stocks estimate implies that feed and residual use
of corn during the first half of the marketing year was up about
110 million bushels from use of a year ago. With the modest expansion
in hog numbers reported in the March Hogs and Pigs report, feed
and residual use of corn for the year should be record large.
March 1 stocks of soybeans were
estimated at 1.405 billion bushels, about 9 million more than
the inventory of a year ago, but about 15 to 20 million bushels
below expectations. There is enough variation in quarterly "residual"
use of soybeans that the implications of the smaller than expected
inventory estimate for the 2000 crop estimate is unclear. There
is no clear evidence that the current crop estimate is in error.
The USDA's March 30 Prospective
Plantings report revealed U.S. producer intentions to reduce corn
plantings by 2.852 million acres in 2001, to a total of 76.693
million. That reduction is about 1 million larger than the market's
expectation and will put acreage at the lowest level since 1995.
The planned reduction is distributed across most of the major
corn producing states, with only Missouri, New York, and Pennsylvania
not participating in the cut. The reduced corn acreage is not
offset by intentions to increase acreage of other feed grain.
Combined acreage of sorghum, barley, and oats (for harvest) is
expected to decline by 470,000 acres.
Seeded acreage of all wheat is expected
to reach only 60.299 million acres, 2.23 million less than seeded
last year. Most of that decline, 2.012 million, is in winter wheat.
Durum acreage is expected to decline by 475,000 acres, while seedings
of other spring wheat is scheduled to increase by only 257,000
The acreage of oilseeds, particularly
soybeans, is set to increase sharply. Intentions for soybeans
totaled 76.657 million acres, 2.161 million more than the record
acreage of last year and about 500,000 more than expected. The
planned increase is widespread, but is especially large in the
Dakotas. Some decline in soybean acreage is expected in Arkansas,
Louisiana, Mississippi, and Virginia. Canola acreage in North
Dakota is expected to increase from 1.27 million last year to
1.6 million in 2001. Nationwide, acreage is expected to increase
by 325,000 acres. Plantings of sunflowers is expected to decline
by 60,000 acres.
Intentions for cotton were reported at 15.614 million acres. That
is an increase of only 77,500 from last year's acreage, considerably
less than the one million acre increase projected by some private
Actual acreage may differ significantly
from intentions for some crops. Spring planting conditions may
influence the actual acreage of corn and soybeans, for example.
In addition, the total acreage of all crops (excluding hay) estimated
in the March report was 3.5 million less than actual acreage of
last year. On the surface, it appears that this reduction is explained
by increased acreage of hay. However, the estimate for hay is
only for harvested acreage. The 3.9 million acre increase projected
for harvested acreage of hay does not appear to be new seedings,
but mostly a rebound in harvested acreage to a more normal level
after last year's western drought. If that is the case, the Juine
Acreage report may show more total cropland, even with some modest
expansion in acreage enrolled in the Conservation Reserve Program.
With "normal" yields,
the corn acreage estimate points to a 2001 crop of 9.5 to 9.6
billion bushels and would allow year ending stocks to be reduced
to 1.4 to 1.5 billion bushels. Concerns about foot-and-mouth disease
will provide some uncertainty about both exports and domestic
feed use. It is unlikely, however, that demand will be significantly
reduced. For soybeans, acreage intentions combined with normal
yields point to a 2001 crop in excess of 3 billion bushels. It
is unlikely that consumption will increase rapidly enough to absorb
such a large crop, particularly if South America has another large
crop in 2002. U.S. stocks are expected to increase to burdensome
With some continued concern about
delayed corn planting in the upper midwest, new crop corn prices
may work back above the loan level over the next few weeks. Soybean
prices are expected to continue to struggle under the weight of
large U.S. and world supplies. The continued high rate of exports,
however, will provide some underlying support.
University of Illinois