CORN Supply Old crop corn stocks as of September 1st were estimated to be 1.8 billion bushels. This is an increase of 37 percent from September 1, 1998. USDA estimates U.S. corn production for 1999/00 to be 9.47 billion bushels. This is 3 percent less than 1998 production. The average U.S. yield was increased from 132.2 bushels per acre to 133.5. If realized, this would be the third largest yield on record. Wisconsin corn producers are expected to average a record 145 bushels per acre (the current record of 141 bushels per acre was made in 1994). Demand USDA lowered corn feed use in the 1998/99 marketing year by 1.6 percent. In addition, they lowered food, seed, and industrial use of 1998/99 corn slightly. The net result was a reduction in total 1998/99 disappearance of just over 1 percent, and an increase in 1999/00 beginning stocks of 6.5 percent. Feed use for 1999/00 was reduced by 75 million bushels, and is now estimated at 5.5 billion. USDA increased their 1999/00 U.S. corn export forecast by the exact amount feed use was reduced. Ending Stocks and Price Expectations USDA raised their 1999/00 U.S. corn ending stocks estimate to 1.968 billion bushels. This is an increase of 9.5 percent from the revised 1998/99 ending stocks level. As a result, USDA lowered their estimate of average U.S. farm prices for corn by 10 cents per bushel. USDA's average farm level price for 1999/00 is now forecast between $1.65 per bushel and $2.05 per bushel. It is unlikely that USDA will lower the corn crop estimate significantly in November. Randy Fortenbery, UW Extension Grain Marketing Specialist, thinks that cash prices are at or near a bottom but that significant volatility is likely to continue through the end of the calendar year. The current market environment is providing corn buyers an attractive opportunity to lock in feed needs for the first half of 2000. While there is not currently a reason to bet on a significant rally in the corn market, the market risk is probably to the up side. The current basis environment is still providing storage incentives to corn producers. Producers who do not have storage opportunities may want to consider replacing cash corn with a call option on the futures market.
*1999 - estimated yield as of October 1 SOYBEANS Supply USDA estimated old crop soybean stocks at 348 million bushels as of September 1st (74 percent higher than last year). They reduced expected soybean harvested acres for the current crop year by 475 thousand and expect U.S. farmers to harvest 2.7 billion bushels of soybeans this fall. This is down 3 percent from last month's estimate, and 2 percent less than 1998 (recall 1998 was a record production year). Wisconsin farmers are expected to harvest 48 bushels per acre and, like corn, set a new record. Soybean production in Brazil remained unchanged relative to September, but Argentine production was increased to 661 million bushels. This is still 5.3 percent below Argentine production last year. Soybean production in China was also increased relative to the September estimate. Demand USDA lowered their estimate of soybean crush this year for the second month in a row. Crush for 1999/00 is now expected to total 1.63 billion bushels, down 0.3 percent from the September estimate. This is still 38 million bushels larger than the 1998/99 crush. Soybean export projections for the current year were also reduced in October but remain ahead of last year. Ending Stocks and Price Expectations Soybean ending stocks for 1999/00 were reduced by 75 million bushels but still 37 million bushels over last year's ending stocks USDA is now projecting an average farm price between $4.75 and $5.25. As with corn, soybean cash prices are probably quite close to their marketing year low. However, significant price volatility will continue to be experienced through the winter. Basis levels continue to provide incentives for storage, but future pricing opportunities will hinge on South American planting and crop progress in coming weeks.
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