Indiana Grain Company, LLC

Posted: 07/11/10

By: tomgrisafi

USDA looks for smaller stocks by the close of this year and into 2011, spelling higher price projections for both corn and soybeans.

In its monthly World Agricultural Supply and Demand Estimates Report, USDA increased its corn price range for the 2010/2o11 marketing year from $3.30 to $3.90 per bushel in June to $3.45 to $4.05 in today’s report. On average, USDA sees a corn prices at $3.50 to $3.60.

Corn usage projections for 2009/2010 increased by 125 million bushels, as higher feed and residual use more than offsets estimated cuts for ethanol production. That was reduced by 50 million bushels to 4.5 billion bushels, reflecting the latest ethanol production data from the Energy Information Administration.

Although daily ethanol disappearance set another record in April, daily production slipped below March’s record pace. EIA’s new weekly ethanol production data series suggests June production, while up from April, will not match March’s pace.

USDA raised its average soybean price forecast for the 2010/2011 crop to a range of $8.10 to $9.60 bushel, up 10 cents on each end from last month’s forecast. USDA’s average price was $9.55 for the 2009/2010 marketing year. USDA projected soybean meal prices for 2010/2011to be $240 to $280 per ton, up $10 on both ends, with an average at $300 per ton.

The supply and demand report follows the June Acreage report, which caught the market by surprise. Among the surprises was a 920,000-acre drop in corn plantings at 87.892 million acres. Meanwhile, soybean acres totaled 78.868 million acres, up 800,000 from the March report.

Now, the big question marks for corn and soybeans center around weather, crop development and yield. Crop conditions ran above average early in the season. However, in corn’s case, yield has been downgraded in three consecutive weeks to 163.5 bushels per acre.

Source: USDA, Meatingplace.com