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USDA numbers show unrelenting corn, soybean demand

Agriculture.com Staff 10/10/2008 @ 12:12pm

When UDSA came along Friday morning with its latest crop production numbers, it was tough to pry stakeholders' attention away from the plummeting stock market.

But, Friday's production numbers -- as well as world supply and demand figures -- did hold a few noteworthy points. U.S. farmers are going to raise a huge corn crop (the second-largest in history), the nation's soybean production is going to decline slightly but still remain large, and the battle for acres spurned on by global demand for U.S. corn and beans will again be in play starting in the first few weeks of 2009.

Demand for corn and soybeans -- both at home and abroad -- is chugging ahead, and that's one high note in Friday's USDA numbers, says Midwest Market Solutions president and market analyst Brian Hoops. Even though crop sizes are large -- despite everything Mother Nature's thrown at farmers this year -- it's still not enough to meet world demand for corn and soybeans

"One bright spot to pull out of this, even though we're producing the second-largest corn crop in history, we are not able to produce enough to meet our total usage estimate," Hoops says. "We are going to use more crop than we are able to produce."

Despite this ongoing demand, Friday's numbers show reason to breathe at least a small sigh of relief when it comes to ending stocks, especially for soybeans, Hoops says. Though the soybean estimates were lower Friday than in the September USDA Crop Production report, "USDA found more bushels with its quarterly stocks number, so supplies are higher than we thought," he adds.

"Despite decreasing yields, this gives us more breathing room going into next year."

Looking ahead, ending stocks will remain tight enough to ignite another acreage battle in a few months. Even though the carryout margins may have widened slightly for soybeans, that doesn't mean there won't be another surge in demand this winter, Hoops says. And, while domestic ethanol demand may ebb because of general financial concerns, corn demand will remain high. Though it's too early to say how that acreage fight may end up, Hoops adds the market will likely begin trading on that notion early in 2009.

"We certainly don't want to go backward with corn acres next year. We probably will see a battle for corn and soybean acres from the standpoint that ending stocks aren't in surplus, but it's not extremely tight like a year ago, either," he says. "We probably won't be starting to trade on the acreage battle until January or February. Corn prices will go higher to stimulate some usage back into that $4.50 to $5 [per bushel] area."

When UDSA came along Friday morning with its latest crop production numbers, it was tough to pry stakeholders' attention away from the plummeting stock market.

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