July 2, 2001
USDA REPORTS PROVIDE
SUPPORT FOR SOYBEAN PRICES
The USDA's June 1
Grain Stocks and Acreage reports contained surprises for both
the corn and soybean markets. June 1 stocks of soybeans were
estimated at 708 million bushels, 66 million less than on the
same date last year and nearly 30 million bushels below the
average trade guess. The large unexplained, or residual, use
of soybeans during the first three quarters of the marketing
year supports the view that the 2000 crop was overestimated,
although supplies have occasionally been found' in September.
Corn stocks on June
1 were estimated at 3.924 billion bushels, about 30 million
below the average trade guess, but 338 million bushels larger
than stocks of a year ago and at the highest level in 13 years.
The smaller than expected figure implies that feed use during
the third quarter of the year was larger than expected, or that
the 2000 crop was slightly over estimated.
Planted acreage of
soybeans is estimated at 75.416 million acres, about 1.5 million
below the average trade guess, 1.2 million below March intentions,
and only 920,000 more than planted last year. The final estimate
of planted, and especially harvested, acreage of soybeans could
change significantly from the June estimate due to the lateness
of planting. Compared to March intentions, the June estimate
of soybean acreage is down by 400,000 acres in both Minnesota
and North Dakota. Acreage is 100,000 below last year's plantings
in both states. June acreage estimates were unchanged from March
intentions in Indiana and Iowa, but increased 300,000 in Illinois.
Regionally, soybean acreage is up from last year's plantings
by 800,000 acres in the western corn belt and 1.3 million acres
in the eastern corn belt. The twelve states in those regions
account for 83.9 percent of the acres, up form 82.2 percent
of last year. Acreage in the rest of the county has declined
by 1.13 million.
Planted acreage of
corn is now estimated at 76.1 million acres, 584,000 below March
intentions and 3.436 million below actual acreage of a year
ago. The largest year-over-year declines occurred in South Dakota
and Texas (500,000 each), Iowa (400,000), and Illinois and Nebraska
(300,000 each). Corn acreage increased by 200,000 acres in Indiana.
The planted acreage
of sorghum is estimated at 9.747 million acres, 379,000 above
March intentions and 552,000 more than planted last year. However,
harvested acreage of sorghum is expected to be 1.13 million
acres more than harvested last year. Planted acreage of cotton
is estimated at 16.3 million acres, 675,000 above March intentions
and 772,000 more than planted last year. Acreage of all crops,
including hay, is estimated at 332.74 million acres, down 1.35
million from last year's acreage. The acreage of all crops excluding
hay, is down by 5.265 million acres. The decline is surprisingly
large, particularly given that some failed wheat acres replanted
to other crops may be double counted. The largest declines in
planted acreage of non-hay crops has occurred in Texas, Oklahoma,
North Dakota, South Dakota, Minnesota, and Montana. Acreage
increased in Indiana and Kansas.
Given the continued
high rate of consumption, the late start to the growing season
in many areas, and the generally low crop condition ratings,
the smaller-than-expected stocks and acreage estimates are more
supportive of soybean than corn prices. With harvested acreage
likely to be 1.3 million acres less than projected last month,
a national average yield just 1.5 bushels below the trend of
39.5 bushels would produce a 2001 crop of 2.825 billion bushels,
160 million bushels less than projected last month. A crop of
that size would not likely result in a significant accumulation
of stocks next year. Depending on the size of the South American
and Chinese crops, exports might be large enough to consume
all fo the 2001 crop.
For corn, the slight
reduction in acreage ,combined with an average yield a couple
of bushels below the 137 suggested by trend, would produce a
2001 crop of about 9.35 billion bushels. A crop of that size
could result in a 400 to 500 million bushel reduction in year
ending stocks by September 1, 2002.
With so much of the
growing season left, price prospects remain very uncertain.
Recent rainfall in China and the U.S. keep large corp prospects
alive for now. Additional worries about the crops would likely
push November 2001 soybean futures above the $5.00 mark, perhaps
to the $5.25 area. Still, that level would keep cash prices
below the loan level. For December 2001 corn futures, a move
above $2.20 may be very difficult. Some additional crop concerns
may be required to push corn prices above the loan level.