First Outlook for the Season

USDA released its initial assessment of crop supply, demand and price prospects for the 2009/10 season on Tuesday.

According to the May World Agricultural Supply and Demand Estimates, total U.S. corn use for 2009/10 is projected to be three percent higher than the current year with higher expected food, seed, and industrial (FSI) use and exports more than offsetting a decline in projected feed and residual use.

Total usage in the FSI category use is projected seven percent higher with a 350-million-bushel rise in ethanol corn use accounting for most of the increase. The 4.1 billion bushel estimate for ethanol reflects the increase in the Renewable Fuels Standard, as well as improved blending incentives as higher gasoline prices increase demand for ethanol.

At the same time, exports are projected to increase by nine percent “as world corn trade and feeding are expected to recover
modestly in 2009/10, partly reflecting a reduction in global supplies of low-cost feed quality wheat.”

Domestic corn feed and residual use is projected down 2 percent with reduced animal numbers and increased availability of distiller’s grains. U.S. corn ending stocks for 2009/10 are projected down 28 percent to 1.1 billion bushels as use is expected to exceed production by 470 million bushels. The season-average farm price is projected at $3.70 to $4.50 per bushel compared with the record $4.20 reported for 2007/08 and the $4.10 to $4.30 projected for 2008/09.

However, the continued cool and wet spring conditions are causing concerns as planting is behind in many states, according to USDA chief economist Joe Glauber. “The real concern there is what is going to happen over the next couple of weeks in the Midwest which has received a lot of wet weather making it hard for farmers to get in the fields, particularly in the Eastern part of the corn belt,” said Glauber.

The latest planting progress update has less than half of the nation’s corn crop planted, which is the same as last year at this time, but well behind the five year average of 71 percent. The biggest concerns are Illinois and Indiana, with just about ten percent of the crop in the ground – compared to over 55 percent last year and the average of 70-85 percent. Another problem area is North Dakota with only seven percent complete. However, Glauber is hopeful progress can still be made quickly. “We’ve seen with the equipment we have today you can get almost half your crop planted in a week of good weather, so I think that’s all we need,” said Glauber.

But, the forecast is calling for more rainfall in the Midwest this week and if that continues it could potentially lead to lower yields down the road.