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Analyst looks ahead at corn use and planting intentions
Corn consumption during the 2006-07 marketing year is expected to
increase in export, domestic consumption, and domestic processing
categories, particularly the latter as ethanol production expands, said
University of Illinois Extension marketing specialist.
"Use this year will be near 10.9 billion bushels and could expand to
billion next year," said Darrel Good. "It appears that U.S. corn stocks
the end of the 2006-07 marketing year could be reduced to about 1.75
billion bushels, under current production and consumption expectations.
"An inventory at that level would project to a 2006-07 marketing year
average farm price of about $2.15 per bushel. The futures market
reflects a 2006-07 marketing year average farm price of about $2.50."
Good's comments came as he reviewed a recent USDA report which, as
expected, increased the forecast of 2005-06 marketing year exports of
U.S. exports are now projected at 1.9 billion bushels, 50 million more
projected last month, and 86 million more than exported last year.
"Based on large weekly export sales since the second week of January,
had expected the USDA to increase the export projection by more than 50
million bushels," said Good. "Export sales during the eight weeks ended
March 2 totaled 437 million bushels. Sales during that eight-week period
last year totaled only 246 million bushels. Based on the USDA's weekly
Export Sales report, U.S. export commitments for the 2005-06 marketing
totaled 1.326 billion bushels as of March 2.
"Of that total, 364 million bushels had not yet been shipped. The total
135 million larger than commitments of a year ago and unshipped sales
up 98 million bushels."
Good noted, however, that USDA estimates of exports are not the
that are ultimately reflected in the marketing year supply and
balances published by the USDA. Census Bureau figures are used as the
"For the 2005-06 marketing year, Census Bureau export estimates are
available through January 2006, the first five months of the year," said
Good. "While USDA estimates indicated that cumulative exports through
January were six million bushels larger than the total of last year,
Bureau figures indicated that the cumulative total was eight million
bushels smaller than that of a year ago.
"The difference of 14 million bushels is not large, but may be one
that the USDA did not increase the marketing year total as much as
expected. Still, the robust pace of export sales suggests that exports
the year might still exceed 1.9 billion bushels by 20 or 25 million
The pace of domestic consumption of corn during the second quarter of
2005-06 marketing year (December 2005 through February 2006) will be
revealed in the USDA's March 1 Grain Stocks report to be released on
"The quarterly pattern of feed and residual use of corn is not
from year to year," Good pointed out. "Last year, for example, 61.55
percent of the total feed and residual use for the year occurred in the
first half of the year. In the four years prior to that, first-half use
a percentage of the total for the year was in a very narrow range of
to 64.5 percent. The average for those four years was 64 percent.
"If use this year is following a 'typical' pattern and use is on track
reach the USDA projection of six billion bushels for the year, use
the second quarter should have been near 1.6 billion bushels, about
to that of a year ago."
The quarterly pattern of domestic processing uses of corn is much more
consistent than the quarterly pattern of feed and residual use. Over the
past five years, use during the first half of the marketing year has
from 47.2 to 47.7 percent of the total for the year. The average was
"If use this year is following a normal seasonal pattern and use is on
track for reaching the USDA projection of 2.985 billion bushels, use
the second quarter should have totaled about 727 million bushels, 90
million more than during the same quarter last year," said Good.
Based on Census Bureau estimates through January and the USDA Export
reports for February, second quarter corn exports were likely near 485
million bushels. Use for all purposes during the quarter should have
near 2.812 billion bushels based on USDA projections of use for the year
and assuming typical seasonal consumption patterns. Use at that level
projects to March 1 U.S. corn stocks of about seven billion bushels,
240 million larger than the inventory of a year ago.
Good said the USDA will release its annual Prospective Plantings report
"Most private analysts are forecasting a significant increase in total
planted acreage of all crops in 2006 compared to plantings in 2005,"
Good. "Expectations for corn, however, are for a marginal decline in
acreage. Those expectations seem to be centering on a decline of 1.5 to
million acres, or about 2 percent.
"Planted acreage of wheat, cotton, and especially soybeans is expected
exceed acreage planted in 2005. As pointed out before, with such a large
surplus of soybeans in the United States and the world, it is a little
surprising that the markets are not aggressively discouraging an
in soybean acreage."
Good said that if 80.1 million acres of corn are planted in 2006, about
72.8 million acres would likely be harvested for grain.
"A trend yield near 150 bushels, then, would produce a 2006 crop of
billion bushels," he said.
Corn consumption during the 2006-07 marketing year is expected to increase in export, domestic consumption, and domestic processing categories, particularly the latter as ethanol production expands, said a University of Illinois Extension marketing specialist.