January 15, 2007

US corn production drops, soy sets record in 2006

In what will almost certainly be a reversal of 2007, corn production in the US dropped slightly and soybean production set a record in 2006, according to year-end statistics by the USDA.

The USDA estimates 2006 corn production at 10.5 billion bushels, which is the third largest on record but still a 5 percent drop from 2005. Yield is estimated at 149.1 bushels per acre, which is the second highest on record behind 2004. More than 70 million acres of corn were planted for grain production in 2006, which is down 6 percent from 2005.

Up from last month's estimates, the projected price range for corn was increased 10 cents on each end of the range to US$3 to 3.40 per bushel.

Sorghum production, another ethanol feedstock, dropped 29 percent from 2005 levels.

Corn acres could increase dramatically in 2007, due in part to the rapid increase in fuel ethanol production capacity. The US ethanol industry currently has capacity to produce roughly 5 billion gallons per year. More than 4.5 billion additional gallons of capacity is under construction or expansion. Current planting estimates forecast an increase in the range of 7 to 10 million acres. The USDA's annual prospective planting report would be released in late March.

The 2006 US soybean crop was the largest on record despite a 0.3 bushels per acre drop in average yield from 2005. Farmers produced 3.19 billion bushels with an estimated 42.7 bushels per acre average yield.

The US season-average soyoil price is forecast at 26.5 to 28.5 cents per pound compared with the 26 to 29 cents per pound estimated last month. Soymeal prices are projected at US$170-185 per short tonne compared to US$165-190 last month.

US oilseed production is estimated at 96.9 million tonnes. Meanwhile, global oilseed production for 2006/2007 is projected at a record 395.4 million tonnes.