October 29, 2001
CORN AND SOYBEAN MARKETS LOOKING
Corn and soybean prices have seemingly
found a harvest time bottom, although most analysts want to see
the USDA's November 9 Crop Production report before reaching that
conclusion. Without surprises in that report, the slow end to
the harvest season should allow some strengthening of the basis
over the next two months and a modest increase in cash prices.
The corn and soybean markets will likely draw some support from
supply concerns in the wheat market and from weather and crop
concerns in South America. Excessive rain in parts of Argentina
may delay corn planting while high temperatures in part of Brazil
may impact the early development of crops.
Increasingly, the corn and soybean
markets will be influenced by the strength of domestic and export
demand as reflected in the rate of use. For corn, weekly information
relative to export shipments and sales is available. Shipments
during the first eight weeks of the marketing year have been relatively
small. At 287 million bushels, shipments during that period were
about 15 percent less than during the same period last year. Most
major importers, with the exception of South Korea have received
less U.S. corn than was received last year. As of October 18,
unshipped sales of U.S. corn totaled about 279 million bushels,
nearly equal to the total of a year ago.
For the year, the USDA projects
U.S. corn exports at 2.05 billion bushels, about 110 million bushels
more than was exported during the 2000-01 marketing year. If the
rate of sales continues to run a little low, the market may have
concerns about the impact of an economic slowdown on world corn
The rate of domestic feed and residual
use of corn is revealed in the USDA's quarterly Grain Stocks report.
The first report of the year, estimating December 1, 2001 stocks,
will be released on January 11, 2002. For now, the lack of expansion
in hog production and the slow down in the rate of placements
of cattle into feedlots suggests that domestic feed and residual
use of corn is stabilizing.
The USDA also reports domestic processing use of corn on a quarterly
basis. All indications are that increases in the use of corn for
ethanol production will boost total domestic processing use for
For soybeans, weekly information
relative to export sales and shipments is supplemented by monthly
Census Bureau estimates of domestic processing use of soybeans.
Export shipments of U.S. soybeans through the first eight weeks
of the 2001-02 marketing year were quite small. At 148 million
bushels, cumulative shipments were about 32 million bushels less
than during the same period last year. This continues the pattern
of slowing shipments that began during the spring of 2001. Shipments
to four of the five largest buyers the European Union,
China, Mexico, and Japan are down sharply from shipments
of a year ago. Taiwan is importing at the same pace as that of
last year. In contrast, unshipped export sales as of October 18
were extremely large. Those sales totaled 322 million bushels,
41 percent larger than unshipped sales on the same date last year.
Outstanding sales are quite large for all major buyers except
Mexico and Taiwan. For the year, the USDA projects U.S. soybean
exports at 980 million bushels. With 45 weeks left in the marketing
year, 42 percent of that total has already been sold.
For the year, the USDA projects
the domestic crush of soybeans at 1.66 billion bushels, only 19
million more than crushed during the 2000-01 marketing year. Crush
jumped 63 million bushels last year. The slow growth is expected
as a result of only a modest increase in domestic meal consumption
and a slight reduction in meal exports. Meal export sales at this
early stage of the marketing year, however, total about 2.3 million
tons, about a million tons more than on the same date last year.
The domestic crush of soybeans during September 2001 was estimated
at 128.3 million bushels, about 540,000 fewer bushels than were
crushed in September 2000.
At this early stage of the marketing
year, prospects for consumption of U.S. corn and soybeans reflects
a wide array of mixed signals. Prospects for an economic slowdown,
unfavorable exchange rates, and lack of growth in domestic livestock
production are not supportive. Alternatively, smaller world wheat
supplies, early season crop concerns in South American optimism
about Chinese demand for soybeans, and prospects for less export
competition from Chinese corn provide some optimism for consumption.
The market will have to sort through all these factors, and others,
over the next several months. For now, producers should monitor
the post-harvest recovery in cash prices for selling opportunities.
Issued by Darrel
University of Illinois