The Supply and Demand Report for corn this week contained a surprise. The USDA lowered projected carryout by 183 million bushels, down to a snug 752.

Big changes occurred in the yield figure, which was reduced from 151.2 to 149.1 bushels per acre. A 2.1 bushel reduction is large for the January report. Prices wasted no time jumping limit higher.

So what does it mean? Lower carryout increases the need for a significantly large crop this and next year. Price appreciation will generate more corn acres in 2007 and 2008. On an interesting note, the USDA did not raise ethanol usage, leaving this unchanged at 2.150 billion. This figure could rise to near 3 billion bushels within 12 to 18 months. The long-term picture turned much friendlier today.

Soybeans now become the real "sleeper" market. If acres are reduced this and next year, supply could move from record high to record low, especially if any weather markets develop.

If you have any questions or comments, contact Top Farmer at 1-800-TOP-FARM, ext. 129.

The Supply and Demand Report for corn this week contained a surprise. The USDA lowered projected carryout by 183 million bushels, down to a snug 752.