July 6, 1999
USDA REPORTS CONFIRM LARGE STOCKS,
The USDAs June 1 Grain
Stocks report released on June 30 generally confirmed the
markets expectations about corn and soybean stocks. Wheat
inventories were smaller than expected.
June 1 corn stocks were estimated
at 3.616 billion bushels, about 19 percent larger than inventories
of a year ago and the largest June 1 inventory in six years. The
stocks estimate implies that feed and residual use during the
third quarter of the marketing year was very close to the level
of use during the same quarter last year. If fourth quarter use
is also equal to that of a year ago, use for the year will be
about 60 million bushels less than currently projected by the
USDA. It appears, however, that exports will exceed the current
projection of 1.875 billion bushels, suggesting that year ending
(September 1) stocks will be only slightly higher than the current
projection of 1.727 billion bushels.
June 1 soybean stocks were estimated
at 850 million bushels, about equal to the previous record inventory
for that date (1986). Stocks were 43 percent larger than on the
same date last year. Seed, feed, and residual use of soybeans
during the first three quarters of the marketing year totaled
an unusually large 219 million bushels. Residual use is often
estimated to be a negative amount in the fourth quarter of the
year. Still, it appears that the 1998 soybean crop was slightly
overestimated. The September stocks estimate should resolve the
June 1 stocks of wheat were estimated
at 945 million bushels, 24 million less than the USDA projection
of early June. Based on the USDA weekly report of export inspections,
exports of wheat during the 1998-99 marketing year may have been
slightly larger than the projection of 1.050 billion bushels.
The June Acreage report estimated
the planted acreage of principal crops at 328.12 million acres,
2.3 million less than planted in 1998. The March Prospective
Plantings report suggested a decline of 4.6 million acres.
With about 1 million more acres in the Conservation Reserve Program
this year, crop acreage is down about 1.3 million acres. Compared
to the March report, the June report showed an increase in acreage
of hay, sorghum, soybeans, and cotton. Acreage declines were primarily
in corn, wheat, and sunflower. Compared to last year, harvested
acreage of principal crops is actually expected to be 1.15 million
Planted acreage of corn is estimated
at 77.611 million acres, 608 thousand less than reported in March
and 2.576 million less than planted last year. The declines relative
to last year are in the south (925,000), Texas (500,000), Iowa
(400,000), Nebraska (300,000), South Dakota (250,000), Ohio (200,000),
Wisconsin (150,000), Michigan (150,000),
and Minnesota (100,000). Acreage is up in Illinois (200,000) and
Corn acreage harvested for grain
is projected at 71.039 million acres, only 1.565 million less
than harvested last year. Unharvested acreage was large in Texas
and the southeast last year due to the effect of dry weather.
The USDA will make its first objective yield estimate in August.
The estimated trend yield, near 131 bushels per acre, would produce
a crop of just over 9.3 billion bushels, very close to the current
annual rate of use.
Planted acreage of soybeans is estimated
at a record 74.205 million acres, 1.1 million above the March
intentions report and 1.83 million more than planted last year.
Acreage is up 1.9 million in the western corn belt and 650 thousand
in the eastern corn belt. Acreage is down by 5 percent in the
rest of the country.
Harvested acreage of soybeans in
1999 is projected at 73.316 million acres, 2.505 million larger
than harvested acreage in 1998. A trend yield of about 40 bushels
per acre would produce a 1999 crop of 2.933 billion bushels. About
400 million larger than the current annual rate of use.
Harvested acreage of winter wheat
is expected to total 35.649 million acres, 4.477 million less
than harvested last year and the smallest since 1972. Harvested
acreage of spring wheat, other than durum, is projected at 14.96
million acres, only 188 thousand less than harvested last year
and more than the market expected. Harvested acreage of durum
wheat is projected at 4.048 million, an increase of 320 thousand
from harvested acreage of a year ago.
The market generally regarded the
June 30 reports as a whole as neutral. Larger spring wheat acreage
in the U.S. and Canada, along with reports of good to excellent
soft winter wheat yields pushed wheat prices lower. Corn and soybean
futures moved to contract lows on generally favorable weather
and large crop prospects. Corn and soybean prices will continue
to reflect weather and crop prospects for the next 8 weeks. The
critical pollination period for the corn crop is underway and
the National Weather Service 6 to 10 day forecast through July
15 shows prospects for very favorable weather conditions. Time
for a weather rally is beginning to slip away.
Issued by Darrel
University of Illinois