In it's monthly World Agricultural Supply and Demand Report, released this week, USDA projects that corn demand in the 2009/2010 marketing year will surpass production by 525 million bushels. For the marketing year that begins Sept. 1, USDA estimates corn usage at 12.3 million bushels. The result will be a significant drop in storage stocks.
While the new crop growing season is barely underway, USDA officials predict a 11.9-billion-bushel corn crop, down 155 million from last month's estimate. The reason is late planting and wet conditions in the Eastern Corn Belt, particularly Illinois and Indiana. It is expected to drop the national average yield to 153.4 bushels or by 2 bushels per acre.
Corn ending stocks for 2009/2010 are now projected to be 1.1 billion bushels. That's 100 million below the 2008/2009 projection. USDA cut feed and residual use for 2009/2010 by 100 million bushels this month based largely on reductions in meat and poultry prodcution.
The average corn price for the new marketing year is pegged at $3.90 to $4.70 per bushel. That compares to $4.10 to 4.30 for 2008/2009.
Soybeans are also on shaky ground. While there is still two to three weeks to plant this year's crop without a production decline, emergence of seed in the ground has been slow. USDA reduced its soybean supply forecasts for 2009/2010 and raised soybean and soybean meal price projections. That will be particularly bad news for pork and poultry producers.
Higher than expected export and crush projections for 2008/2009 have tightened beginning stocks. Soybean exports for 2008/2009 are now at a record 1.25 billion bushels. China has been purchasing more and Argentina has been exporting fewer soybeans.
Ending stocks for 2008/2009 are projected at 110 million bushels, down 20 million from May's estimate. USDA also cut soybean ending stocks for 2009/2010 by 20 million bushels to 210 million.
Average soybean price for the new crop is estimated at $9 to $11 per bushel. Soybean meal prices are pegged to be $275 to $335 per short ton.