March 20, 2007

Higher US corn prices seen for 2007/08
              

US corn prices at the farm level are expected to average US$3.60/bushel in the 2007/08 marketing year, US$0.40/bushel above the midpoint of the 2006/07 forecast, according to the USDA. The rise is attributed to increased ethanol production driving demand for corn.

US corn acreage for 2007 is expected to rise 8.7 million acres from last year to register 87 million acres, mainly due to reduced soy planting in favour of corn especially in the Corn Belt. Additionally, spring wheat and cotton plantings in the Northern Plains and in the southern US respectively are seen to shift towards corn cultivation.   

Meanwhile, US 2007/08 soy prices at the farm level are forecast to average $7.10/bushel, up from the US$6.20 midpoint of the 2006-07 projected range.

Although ample US and global soybean supply is seen at the start of 2007/08, US soy prices are expected to stay at relatively high levels amid strong corn prices and speculative demand for soybeans.

Domestic soy acreage for 2007 is seen to fall 5 million acres on-year to 70.5 million acres.

USDA expects corn demand for ethanol production in 2007/08 to rise 49 percent from the current year's projection to reach 3.2 million bushels, which accounts for 26 percent of overall domestic corn demand.