Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Private Forecaster Pegs U.S. Corn Crop at 12.159 Billion Bushels
FC Stone has estimated the ’08/’09 U.S. corn crop at 12.159 billion bushels. Their soybean crop estimate was placed at 3.003 billion bushels. In August, USDA estimated the U.S. corn crop at 12.288 billion bushels and the soybean crop at 2.973 billion bushels. In 2007, U.S. corn production was 13.074 billion bushels and soybean production was 2.585 billion bushels. This private estimate indicates that ending stocks for U.S. corn would decline and U.S. soybean ending stocks would increase from USDA’s August estimate. The next scheduled USDA supply and demand report will be issued on September 12th.
As the line-up of pre-report production estimates make their way onto the trading scene, there are a few market factors that are worth mentioning. First, the dynamics of the commodity markets are changing. The price of crude has declined by nearly $36.00 per barrel (now trading at $108.85) and the U.S. dollar index has increased by nearly seven points since July 15th (now trading 78.56). The dollar index last traded at this level in December ’07. At that time Dec ’08 corn futures were trading in the $4.40 to $4.75 range. Evidence of demand destruction, loss of demand due to high commodity prices, now has commodity prices seeking a new equilibrium at lower levels in order to begin the process of rebuilding demand.
Marketing Strategy
The vagaries of the weather and its impact upon projected U.S. production for the ’08 corn and soybean harvest have not been totally accounted for at this point in time. The oil industry was spared significant damage along the Gulf Coast from hurricane Gustav. Resulting rains for the soybean crop have been beneficial in the Corn Belt albeit somewhat late. General consensus is that no big changes/surprises are expected to be released in USDA’s September estimates.
The possibility of an early frost and possible crop damage from looming hurricanes will be watched this next week by commodity traders. Those possibilities are enough reason to hold up on grain sales at this point in time. Currently, Dec ’08 corn futures are trading at $5.64; Nov ’08 soybean futures at $12.43; and Dec ’08 SRW wheat at $7.76 per bushel.
For technical assistance on grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.