March 4, 2005

 

Prices of US corn, soybean seen subdued

 

 

The price forecast for US corn and soybeans looks pretty bland unless weather concerns for 2005 crop spark activity.

 

It would require more than lower production in 2005 to spur any increase in prices, according to Darrell Good, University of Illinois agriculture economist.

 

Good made his comments to producers attending the Illinois Wheat Forum in Mt. Vernon last week.

 

"For the corn market to get excited, we have to show yields that are well below trend yields," Good said. The 2005 trend corn yield is in the 140-145-bushel-per-acre range.  One expects to repeat the (corn crop) year we had in 2004, he said.

 

Last year's corn crop beat the production figure of the previous year by 1.8 billion bushels.

 

In 2004, Illinois farmers produced a record 2-billion-bushel-plus corn crop with a record average yield of 180 bushels per acre.

 

Good noted increases in feed and industrial uses of corn, and a 15 per cent year-to-year increase in corn use for ethanol.

 

On the soybean side, exports have been strong, with China being a major customer. USDA had expected the Chinese to buy soybeans from South America, but that hasn¡¯t happened to the extent USDA anticipated.

 

Good acknowledged the size of the South American crop remains a looming question. A lack of rain in southern Brazil has left some marketers wondering about the impact on the crop at this late stage in the growing season.

 

There remains a 440-million-bushel surplus of soybeans, which Good said is the largest inventory since the mid-1980s. Given that situation, prices have remained mostly steady in the $5-per-bushel area.

 

While they¡¯re not good, they have held up. ¡±Good said of soybean prices.

 

He told producers it is hard to predict with much certainty just what impact any appearance of Asian soybean rust in the US may have on market prices.