Melvin Brees
Farm Management Specialist
University of Missouri Extension




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October 13, 2000

What's Left is What Counts

Mixed harvest reports from the Corn Belt had created doubts about USDA's September Production estimates. Some areas are finding excellent or outstanding yields. This includes much of Missouri. Yet, other important Corn Belt states are reporting some disappointing yields--especially for soybeans. Thursday's (10-12-00) USDA supply and Demand Report confirmed some of the yield doubts, when they lowered corn and soybean estimated production.

The corn and soybean crops are still expected to be records. The estimated 10.192 billion bushels corn crop will exceed the previous record 1994 crop. The 2.823 billion bushels soybean crop is also a record and follows the three largest production years ever. In spite of some disappointing yields, there is a large supply of grain being harvested.

Demand is expected to be strong. USDA estimates a record 10.1 billion bushels of corn use and this follows apparent record use of the 1999 crop. The USDA also estimated a record 2.749 billion bushels soybean use which follows estimated record use of the 1999 crop.

With large production and record use, what is left over influences price. Supply minus demand equals ending stocks. When grain production exceeds demand, regardless of how large either one is, the ending stocks increase. While they did lower production and estimate record demand, USDA still expects ending stocks of corn and beans to grow. Increasing ending stocks are negative to prices!

The good news may be that things could be getting better instead of worse. USDA's September report projected 2000-01 corn ending stocks at 2.2 billion bushels. While still an increase over the '99-'00 crop ending stocks of 1.7 billion bushels, Thursday's report lowers the 2000-01 projection to 1.8 billion bushels. Probably the most bullish item in the report was a significant cut in 2000-01 World Coarse Grain ending stocks. Soybean 2000-01 ending stocks of 365 million bushels is much better than the nearly 500 million bushels expected earlier in the year. In spite of the projected increases in U.S. ending stocks, USDA increased estimated average prices for the 2000-01 crops to $1.85 corn and $4.90 soybeans--up from $1.70 and $4.75 in September.

The smaller increase in ending stock estimates results in somewhat better price expectations for the 2000 crops. To get significantly higher prices, ending stocks (what's left) need to be decreasing instead of increasing. USDA still doesn't expect that to happen.

What does this mean for winter marketing strategies? As long as ending stocks are expected to increase, price gains will likely be limited. For now, small post-harvest price increases and basis gains (similar to the past two years) could push Central Missouri corn prices above USDA average price projections and provide selling opportunities. Soybeans may need a little more than that to reach USDA price expectations. --Melvin

University of Missouri ExtensionDecisive Marketing - October 13, 2000 -- Revised: April 20, 2004