The latest USDA Crop Supply and Demand Report, released on Jan. 11, gives another indication of just how big or how small the U.S. corn and soybean crop was in 2007 and how large or tight the carry-over grain stocks are. Following are some highlights of the latest USDA Crop Report:

Corn:
According to the USDA Report, there was an estimated 86.5 million acres of corn harvested in 2007, with a record total production of 13.1 billion bushels of corn. This production level is up 24% from the 10.5 billion bushels of corn produced in the U.S. in 2006, and was higher than the 11.2 billion bushels produced in 2005. The previous record U.S. corn production was 11.8 billion bushels in 2004. The 86.5 million corn acres harvested in 2007 was the second highest on record in the U.S., trailing only the corn acreage harvested in 1933. The 2007 harvested corn acreage was 22% higher than the corn acres harvested in 2006. According to the USDA report, total corn stocks in the U.S. on December 1, 2007 were projected at 10.27 billion bushels, compared to 8.93 billion bushels on December 1, 2006.

The projected corn ending stocks for 2007-2008 are estimated at 1.4 billion bushels, which is up slightly from the corn carry-over of 1.3 billion bushels for 2006-2007, but is significantly lower than the last corn carryover projection of 1.8 billion bushels one month ago in December 2007. To put it another way, USDA is projecting that the U.S. will utilize almost 13 billion bushels of corn in the 2007-2008 marketing period for livestock feed, ethanol, food products, seed, exports, etc., which compares to 11.2 billion bushels of total corn usage in 2006-2007. Corn used for ethanol production is expected to increase by about 1.2 billion bushels in the coming year, with moderate increases in corn usage also projected for livestock feed and exports. This means that at current projections for U.S. corn usage, another 13-billion-bushel corn crop will be necessary in the 2008 growing season to maintain the current U.S. corn carryover levels.

Soybeans:
For the first time in four years, total U.S. soybean production in 2007 dropped below 3 billion bushels, with an estimated production of 2.58 billion bushels in 2007, according to the January 11 USDA Crop Report. The total harvested soybean acreage in 2006 was estimated at 62.8 million acres, which was down significantly from the 74.6 million acres of soybeans harvested in 2006, or the 71.3 acres harvested in 2005. The USDA Report estimated total U.S. soybean stocks on December 1, 2007, at 2.33 billion bushels, which is down from 2.7 billion bushels on December 1, 2006 The projected soybean ending stocks for 2007-2008 are estimated at 175 million bushels, which is down significantly from the soybean carryover projections of 573 million bushels in 2006-2007.

2007 Crop Yields
The National average corn yield in 2007 was estimated at 151.1 bu./acre, which is above the average U.S. corn yield of 149.1 bu. in 2006 and 148.0 bu. in 2005, but is considerably below the record average U.S. corn yield of 160.4 bu. in 2004. The average corn yield in Minnesota in 2007 was 146 bu./acre, which was below the 2006 corn yield of 161 bu., and well below the record statewide corn yield of 174 bu. in 2005. Iowa had an estimated corn yield of 171 bu./acre in 2007, which was the highest in the Corn Belt states. The estimated U.S. average soybean yield in 2007 was 41.2 bu./acre, which was down slightly from 42.7 bu. in 2006, and 43 bu. in 2005. The estimated average soybean yield in Minnesota in 2007 was 41 bu./acre, which compares to 44 bu. in 2006 and 45 bu. in 2005. Iowa soybean yields were estimated at 51.5 bu./acre in 2007, which was the highest in the U.S.

2007 Price Prospects:
Many grain marketing analysts and producers were fairly bullish about the grain markets going into this USDA Report. The significant reduction in the level of projected ending stocks for corn in the latest U.S. Crop Production Report, as compared to month earlier, should re-enforce the very strong corn prices that have existed late in 2007. Soybean prices should also be strengthened in the coming weeks by the projected reductions in the total U.S. soybean carryover, as compared to a month earlier.

USDA is estimating an average on-farm corn price of $3.70-4.30/bu. for 2007-2008, which compares to a $3.04 average corn price for 2006-2007, and a $2 average corn price for 2005-2006. USDA is estimating an average on-farm soybean price for 2007-2008 of $9.90-10.90/bu., which compares an average price of $6.43 for 2006-2007, and $5.66 for 2005-2006. The local cash prices at Lake Crystal, MN, on Jan. 14, 2008, were $4.82/bu. for corn and $12.34/bu. for soybeans, which compares to local cash prices of $3.48 for corn, and $6.51 for soybeans a year ago in 2007. The current cash grain prices are significantly higher than local cash price levels at this time two years ago in 2006, which were $1.72/bu. for corn and $5.34/bu. for soybeans.

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at kent.thiesse@minnstarbank.com.