Extension Communications
3614 Administrative Services Building
Ames, Iowa 50011-3614
(515) 294-9915
4/2/03
FOR IMMEDIATE RELEASE
Contacts:
Robert Wisner, Ag Economics, (515) 294-6310, rwwisner@iastate.edu
Jean McGuire, Continuing Education and Communication Services, (515) 294-7033,
jmcguire@iastate.edu
Planting Intentions and Grain Stocks Show Tighter Corn Supply
Ames, Iowa - The United States Department of Agriculture's (USDA) reports on this year's planting intentions and grain stocks show a tighter corn supply and weaker soybean price prospects over the next year than previously anticipated, according to Robert Wisner, Iowa State University (ISU) Extension economist.
"The lower than expected USDA March 31, 2003 planting intentions
and stocks report will make corn prices potentially more weather sensitive
this year than previously expected," said Wisner. He added that strong
corn prices immediately after release of the reports reflected fund traders
buying back recently sold short futures positions.
While news from the reports was slightly negative to soybean price prospects,
Wisner said a sharp drop in weekly U.S. soybean export sales will be needed
from now through summer to keep from lowering U.S. August 31 soybean stocks
below minimum pipeline levels. If export sales do not drop sharply over
the next few weeks, slightly stronger old-crop cash soybean prices are
possible. Brazilian harvesting delays and port congestion currently are
supporting U.S. soybean exports.
The economist added that cash soybean prices from September onward have
considerable downward price risk from an estimated 460 million bushel
increase in Brazilian and Argentine production this spring. Just the increase
from last year in these countries is equivalent to 93% of last year's
Iowa soybean crop.
Wisner said concern about higher fertilizer and energy costs, and irrigation
water availability in the Great Plains appears to have impacted crop planting
intentions. Prospective corn acreage is about the same nationally as last
year, but 1.5 million acres less than generally expected by the grain
trade. States from South Dakota and Colorado to Texas showed a prospective
decline from last year of 1.1 million acres of corn. The eastern Corn
Belt and Minnesota showed prospects for an 800,000-acre increase in corn
plantings, while Iowa farmers indicated they plan to plant the same amount
of corn and soybeans as last year.
Domestic Corn Feeding
The economist said domestic corn feeding in the December-February quarter
(based partly on March 1 grain stocks) was about 4% higher than last year's
unusually low level. Higher feed use reflects this year's colder winter
and reduced sorghum and barley feeding. Animal numbers are slightly lower
than a year earlier because of the sharp decline in numbers of cattle
on feed, and more co-products from ethanol production being fed.
Corn Market Implications
The USDA reports show slightly tighter old-crop corn supplies, a modestly
tighter new-crop supply-demand balance, and greater potential responsiveness
of corn prices to weather this spring and summer than previously expected,
Wisner said. For the coming year, with a trend U.S. yield, the economist's
projections indicate the expected August 31, 2004 U.S. corn carryover
would be between 1.1 and 1.2 billion bushels, versus earlier projections
of stocks rising to the 1.25 to 1.4 billion bushel level. Stocks at 1.1
to 1.2 billion bushels would have the potential to lower the U.S. average
corn price 20 to 25 cents from the 2002-03 marketing year average. Lower
prices would be about offset by increased government payments.
Potential corn production with a trend yield would be about 10.15 billion bushels, up from last year's weather-reduced 9 billion bushel crop. Total corn use in the current marketing year is expected to be about 9.7 billion bushels, and has the potential to increase to 9.95 billion next season.
Soybean Market Implications
Intended soybean acreage was 700,000 acres above average trade expectations,
and March 1 stocks were about 1% larger than expected. That news is slightly
negative to soybean price prospects for next fall and winter. The economist
said that with a normal U.S. yield, expected 2004 U.S. soybean carryover
stocks would be in the low 200 million bushel range, slightly more comfortable
to the grain trade than this season's likely 160 to 170 million bushel
carryover. Wisner added that weekly export sales reports will be a key
old-crop market indicator for the next few weeks because 99% of the marketing
year projected exports have already been sold.
North Dakota and Minnesota farmers intend to plant 530,000 acres more soybeans than last year. Wisner said North Dakota soybean yields normally are about 20% below the national average, so increased acres there have less market impact than if they were in Iowa. Eastern Corn Belt farmers plan to grow 700,000 fewer soybean acres than in 2002. Southern farmers reported intentions to plant 100,000 more soybean acres and 100,000 more corn acres (excluding Texas) this year than in 2002.
While planting intentions are a good indicator of potential acreage of major crops, final plantings may be influenced some by weather, price trends, and input costs. The economist said energy costs have declined modestly and mountain snow-pack to supply water for the Platt River has increased substantially since the survey was taken.
Corn Summary
* Prospective corn plantings, 79 million acres, essentially unchanged
from 2002
* March 1 U.S. corn stocks, 5.13 billion bushel down 11% or 664 million
bushels from March 1, 2002
* Indicated December-February U.S. corn feeding up 4% from 2002
* Great Plains corn intentions down 1.1 million acres
* Eastern Corn Belt and Minnesota up 800,000 acres
Soybean Summary
* Prospective soybean plantings at 73.1 million acres for 2003 versus
73.8 million acres in 2002.
* March 1 U.S. soybean stocks, 1.2 billion bushel down 10%, or 134 million
bushels, from March 1, 2002
* Eastern Corn Belt intended soybean plantings down 700,000 acres
* Minnesota and North Dakota up 530,000 acres
More detail on Wisner's market projections can be found at http://www.econ.iastate.edu/faculty/wisner.
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