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Corn+Soybean Digest

Crop Report Summary

The latest USDA Crop Supply and Demand Report, released on Jan. 12, provides another indication of just how big or how small the U.S. corn and soybean crop was in 2008, and how large or tight the carryover grain stocks are. Here are some highlights of the latest USDA Crop Report :

According to the USDA Report, there was an estimated 78.6 million acres of corn harvested in 2008, with a with a total production estimated at 12.1 billion bushels, which is the second highest production level on record behind 2007. The estimated 2008 corn production is 7% below the production of 13.1 billion bushels of corn in 2007, but considerably higher than the production level of 10.5 billion bushels of corn in 2006, and the 11.2 billion bushels produced in 2005. The 78.6 million corn acres harvested in 2008, was well below the 86.5 million harvested acres of corn in 2007, which was the second highest on record in the U.S.

According to the USDA Report, total corn stocks in the U.S. on December 1, 2008, were projected at 10.1 billion bushels, which compares to 10.3 billion bushels on December 1, 2007, and 8.9 billion bushels in 2006. The projected corn ending stocks for 2008-2009 are estimated at 1.8 billion bushels, which is up considerably from analyst estimates near 1.5 billion bushels, and up slightly from the corn carry-over of 1.6 billion bushels for 2007-2008. USDA is projecting that total U.S. corn use for 2008-2009 will be approximately 12.2 billion bushels of corn for livestock feed, ethanol, food products, seed, exports, etc. This compares to 12.7 billion bushels of total corn usage in 2007-2008, and 11.2 billion bushels in 2006-2007. Corn used for ethanol production is expected to increase by about 700 million bushels in the coming year, and is 1.6 billion bushels above two years ago. This means that at current projections for U.S. corn usage, another corn crop of over 12 billion bushels will be necessary in the 2009 growing season in order to maintain the current U.S. corn carryover levels.

According to the USDA report, total U.S. soybean production in 2008 is estimated at 2.96 billion bushels, which is up 11% from the 2.58 billion bushels of soybeans produced in 2007, but below U.S. soybean production level of 3.2 billion bushels in 2006. The total harvested soybean acreage in 2008 was a record of 74.6 million acres, and was 16% higher than the 62.8 million acres harvested in 2007. The report estimated total U.S. soybean stocks on Dec. 1, 2008 at 2.28 billion bushels, which is down 4% from 2.36 billion bushels on Dec. 1, 2007 The projected soybean ending stocks for 2008-2009 are estimated at 225 million bushels, which is higher than analyst estimates of approximately 186 million bushels, up slightly from 205 million bushels in 2007-2008, but well below the soybean carryover levels of 574 million bushels in 2006-2007.

2008 Crop Yields
The national average corn yield in 2008 was estimated at 153.9 bu./acre – the second highest on record, trailing only the 2004 National average corn yield of 160.4 bu./acre. The 2008 U.S. corn yield was above recent average corn yields of 150.7 bu./acre in 2007, 149.1 bu./acre in 2006 and 148.0 bu./acre in 2005. The average corn yield in Minnesota in 2008 was estimated at 164 bu./acre, which is above the 2007 average yield of 146 and the 2006 corn yield of 161, but is well below the record statewide corn yield of 174 bu./acre in 2005. Iowa had an estimated corn yield of 171 bu./acre in 2008, which trailed only the Illinois average yield of 179, among the Corn Belt states.

The estimated U.S. average soybean yield in 2008 was 39.6 bu./acre, which was down from 41.7 bu. in 2007, 42.9 in 2006 and 43 in 2005. The estimated average soybean yield in Minnesota in 2008 was 38 bu./acre, which is down considerably from the previous average yields of 42.5 bu. in 2007, 44.5 in 2006 and 45 in 2005. Iowa soybean yields were estimated at 46 bu./acre in 2008, which was among the highest in the U.S.

2009 Price Prospects

Most grain marketing analysts were fairly mixed regarding corn and soybean market projections going into the USDA report. However, the initial grain market reaction on Jan. 12 was quite negative due to the much larger that anticipated levels of ending stocks for corn and soybeans in the USDA report. Corn futures prices on the Chicago Board of Trade on Jan. 12 opened lower by 25-30¢/bu., while CBOT soybean future prices opened lower by 45-50¢/bu.

USDA is estimating an average on-farm corn price for 2008-2009 at a rather wide range of $3.55 to $4.25/bu., which compares to an average corn price of $4.20/bu. for 2007-2008, $3.04 for 2006-2007 and $2 for 2005-2006. USDA is also estimating a wide range in average on-farm soybean prices for 2008-2009 at $8.50 to $9.50 per bushel, which compares to an average soybean price of $10.10 per bushel for 2007-2008, $6.43 per bushel for 2006-2007, and $5.66 per bushel for 2005-2006. The local cash grain prices at Lake Crystal, MN, on Jan. 12, 2009 were near $3.40/bu. for corn, and $9.25/bu. for soybeans. This compares to $4.80/bu. for corn and $12.35/bu. for soybeans a year ago in 2008, and $3.50 for corn and $6.50 for soybeans in January 2007. Local new-crop grain prices on Jan. 12 at Lake Crystal for the fall 2009 were near $3.60/bu. for corn and $8.75/bu. for soybeans.

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at [email protected].

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