June 24, 2002
AND USDA REPORTS TO INFLUENCE CORN AND SOYBEAN PRICES
soybean prices continue to demonstrate seasonal strength, influenced
by a high rate of consumption and U.S. and world crop concerns.
For soybeans, both the domestic crush and exports continue at
a pace above that projected by the USDA. The expected return of
China to the important market should keep the pace of U.S. exports
high, especially in the light of continued problems in Argentina.
Based on the USDA's weekly export inspection report, U.S. exports
through June 20 were 5 percent larger than cumulative shipments
of a year ago. For the year, the USDA has projected a 3.5 percent
increase. Unshipped sales as of June 13 totaled 97.5 million bushels,
compared to 74.2 million bushels of outstanding sales on the same
date last year. Similarly, the cumulative domestic crush during
the first three quarters of the marketing year is estimated at
1.30 billion bushels, 4.7 percent larger than the crush during
the same period last year. For the year, the USDA has projected
an increase of 3.3 percent.
the pace of exports compared to that of last year accelerated
in the second and third quarters of the marketing year. The USDA's
export inspection report indicated that cumulative shipments as
of June 20 were 3 percent larger than the total of a year ago.
However, unshipped sales as of June 13 totaled 252.5 million bushels,
compared to 290.1 million on the same date last year. For the
year, the USDA projects that exports will reach 1.925 billion
bushels, 10 million less than shipments of a year ago. Corn exports
were very large during the summer of 2001. The recent rapid pace
of shipments will have to continue if the USDA projection is to
June Grain Stocks report will be released on June 28. The market
will use the June 1 corn stocks estimate to gauge the rate of
domestic use of corn during the third quarter of the marketing
year. If the pace of consumption was in line with the USDA projection,
June 1 stocks of corn should have been near 3.67 billion bushels,
about 250 million less than on the same date last year. Soybean
stocks on June 1 should have been near 690 million bushels, based
on the estimates of use during the third quarter of the year.
to the Grain Stocks report, the market will have considerable
interest in the Acreage report to be released on the same date.
Late planting, particularly in the eastern corn belt, suggests
that the Acreage report will reflect a fair amount of intentions
rather than actual plantings. Still, the report will be an important
benchmark for judging final planted acreage of the major crops.
The market expects the report to show a significant switch from
corn to soybean acreage due to the lateness of the planting season
in some areas. The report is also expected to reflect failed wheat
acres being planted to other crops. Some private analysts have
projected a significant increase in sorghum acreage, compared
to March intentions, due to replanting of failed wheat acreage.
In addition to acreage of individual crops, the report will give
some perspective on the magnitude of abandoned acreage.
Weather conditions and
crop prospects will be the dominating price factors for the next few months. U.S.
corn and soybean yield prospects may be the most important price factors, but
developments in other areas will also be critically important. In particular,
the market is taking note of dry conditions in Australia, flooding in parts of
China and Russia, and the slow development of the monsoon in India. For coarse
grains, world production has been at a relatively high level since 1995-96. Individual
countries have had shortfalls in production, but the U.S. has had consistently
large crops since 1996. For wheat, world production has been relatively large
since the consecutive small crops of 1994-95 and 1995-96. The current relatively
low level of U.S. and world stocks and the generally low prices of wheat and coarse
grains suggest that production shortfalls could have significant price impacts.
The market is beginning to reflect production concerns, but price action may be
relatively conservative until the U.S. crops reach the critical reproductive stages
Issued by Darrel
University of Illinois