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No Shockers in Report, Says Good

USDA's grain stocks and planting intentions report Monday was tame compared to a year ago, but with corn stocks and potential acres both smaller than prereport guesses from the trade, ag economist Darrel Good doesn't see much potential for sharply lower corn prices in the 2014-15 marketing year.

USDA estimates March 1 stocks of corn at 7 billion bushels, which was 98 million less than the trade was looking for, said University of Illinois agricultural economist Darrel Good in a webinar hosted by farmdoc Daily. "The difference of 98 million bushels this year is fairly tame, compared to where we have been," Good said. A year ago, the gap was almost 400 million bushels.

The stocks report implies that feed and residual use of corn in the first half of the current marketing year was 3.85 billion bushels, about 73% of USDA's projected use of 5.3 billion bushels for the year. That pace is about the same as the past three years but ahead of the pace considered normal before that.

The acres producers expected to plant to corn, as of March 1, was also below trade guesses by some 1.2 million acres.

Good uses USDA's planting estimate of 91.69 million acres, reduced by 7.3 million acres for a harvested total. He multiplies that by a trendline yield of 163.2 bushels per acre to estimate production at about 13.774 billion bushels. Add a carryover at the end of this year of 1.456 million bushels, and the supply going into next year would be about 15.23 billion bushels. He subtracts 13.6 billion bushels of consumption to come up with a carryover next year of 1.6 billion bushels.

"To me that does not point to a large decline" in an average price, he says. Good thinks it could be $4.25 a bushel, only slightly lower than the $4.50 projected price for this year. The futures market is pointing to prices above that, he pointed out.

Good said that the USDA estimate for soybean stocks was almost identical to trade guesses. The 81.493 million acres that farmers intend to plant to soybeans was about 300,000 more than expected.

Good said that today's planting intentions report doesn't seem to include acres that weren't planted last year, which might boost the actual planted acres by 4 million to 5 million in the June acreage report.

You can find Good's written analysis of today's report here.

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