Commentary: Wheat, corn, rice and soybean supplies for 2008 begin to come into focus

by Ron Sterk
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How much wheat, corn, rice and soybeans the U.S. and the world will have in the next marketing year began to come into focus with the release of the May 9 U.S. Department of Agriculture World Agricultural Supply and Demand Estimates (WASDE) and Crop Production reports. In a nutshell, the users of wheat and rice may see an easing in current tight market conditions while the corn and soybean situation may remain tight.

The WASDE included the initial 2008-09 supply and use estimates for all crops except global soybeans. Crop Production offered the first survey-based forecast of U.S. winter wheat production.

While projections for 2008 U.S. wheat and rice production were rather unremarkable, with all wheat up 16% (winter wheat up 17% and slightly above expectations) and rice nearly even with a year ago, globally the U.S.D.A. expects record large production for both of the world’s two major food crops, with wheat up 8% and rice up just over 1% from a year earlier. Although consumption for both also is expected to increase, with wheat up 3% and rice up about 1% and record high, carryover, or unused supply at the end of the 2008-09 marketing year, were projected to increase as well, with wheat up nearly 13% and rice up 5%.

Significant for wheat and rice is that no major weather situations, usually drought, currently are threatening crops on a large scale anywhere in the world.

The picture is less focused for corn and soybeans, especially in the U.S. where just over half of the corn and only 11% of the soybeans were planted as of May 11, compared with 77% and 33%, respectively, as average for the date, according to the May 12 U.S.D.A. Crop Progress report.

The U.S.D.A. projected U.S. corn yield of 153.9 bus an acre already was trimmed 1 bu per acre from the 1990-07 trend because of the delayed planting, the Department said. Based on indicated acreage from the March Planting Intentions report, the U.S.D.A. projected 2008 U.S. corn production would drop 7% from 2007. Coupled with only a 2% drop in expected use, demand for corn is expected to exceed production by 635 million bus, or 5%, in 2008-09. Use of corn to make ethanol in 2008-09 was projected to increase 33% and consume 33% of 2008 corn production, compared with 23% of the 2007 crop this marketing year. U.S. corn carryover next year is expected to plunge 45% from the current year.

Globally, 2008-09 corn production is expected to decline slightly from the current year.

The 2008 U.S. soybean crop was projected to increase 20% from 2007, due to increased plantings and slightly higher yields, with carryover at the end of 2008-09 projected to increase 28%, but still be historically low.

To add clarity to the corn and soybean supply picture, the trade will have to watch Crop Progress reports the next couple of weeks to see improvement in plantings across the Corn Belt, with time to plant corn especially short.

Overall, the June 28 Acreage report will be the next "big" report for the trade, followed by July Crop production, which includes the first spring wheat and durum production forecasts, and August Crop Production for the first corn, soybean and rice survey-based forecasts.

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