Crop Report Summary

The latest USDA Crop Supply and Demand Report, released on Jan. 12, gives another indication of just how big or how small the U.S. corn and soybean crop was in 2006, and how large or tight the carry-over grain stocks are as we head into 2007. Following are some highlights of the latest USDA Crop Report:

Corn:
According to the USDA Report, there was an estimated 73.6 million acres of corn harvested in 2006 with a total production of 10.5 billion bushels of corn. This production level is down 5% from the 11.2 billion bushels of corn produced in the U.S. in 2005, and down 11% from the record production level of 11.8 billion bushels in 2004. The U.S. harvested corn acres in 2006 were down from the 73.6 million corn acres harvested in 2005, but significantly higher than the 70.6 million acres harvested in 2004. Total corn stocks in the U.S. on Dec. 1, 2006, were projected at 8.93 billion bushels, which is down 9% from the previous year. The projected corn ending stocks for 2006-2007 are estimated at 752 million bushels, which is down significantly from the corn carry-over of 2.4 billion bushels for 2005-06 or the 2.1 billion bushels for 2004-05, and is even lower than the 958 million bushel corn carryover for 2003-04. To put it another way, USDA is projecting that the U.S. will utilize almost 11.8 billion bushels of corn in the 2006-07 marketing period for livestock feed, ethanol, food products, seed, exports, etc. This means that a 752 million bushel carryover represents less than one-month supply of U.S. corn reserves, as we head into the 2007 growing season.

Soybeans:
Total U.S. soybean production in 2006 was estimated to be the largest on record, only slightly ahead of the U.S. soybean production totals in both 2005 and 2004. The Jan. 12 USDA Crop Report estimated total U.S. soybean production in 2006 at 3.19 billion bushels, which compares to 3.06 billion bushels in 2005, and 3.12 billion bushels in 2004. The total harvested soybean acreage in 2005 was estimated at 74.6 million acres, and is above the 74.0 million acres harvested in 2004. The USDA Report estimated total U.S. soybean stocks on Dec. 1, 2005, at 1.46 billion bushels, which is 9% higher than a year earlier. The projected soybean ending stocks for 2006-07 are estimated at 575 million bushels, which is up from 449 million bushels in 2005-06, and is up significantly from 256 million bushels for 2004-05, and 112 million bushels as recently as 2003-2004.

2006 Crop Yields:
The national average corn yield in 2006 was estimated at 149.1 bu./acre, which is up slightly from 148.0 bu./acre in 2005, but is down considerably from the record average U.S. corn yield of 160.4 bu./acre in 2004. However, even with dry weather in parts of the U.S. in 2005 and 2006, average estimated U.S. corn yields were still higher than the 2003 average yield of 142.2 bu./acre.

The estimated U.S. average soybean yield in 2006 was 42.7 bu./acre, which was down slightly from 43.0 bu./acre in 2005, but slightly higher than the 2004 average yield of 42.5 bu./acre. The estimated average soybean yield in Minnesota in 2006 was 44 bu./acre, which compares to 45 bu./acre in 2005, and to 33.5 bu./acre in 2004.

2007 Price Prospects:

Most grain marketing analysts and many producers have been fairly bullish about the grain markets going into this USDA Report. The relatively tight levels of projected ending stocks for corn in the latest U.S. Crop Production Report should re-enforce stronger corn prices early in 2007, while ending stocks for soybeans appear to be quite manageable, given current soybean usage projections. USDA is estimating an average on-farm price of $3-3.40/bu. for 2006-07, which compares to $2/bu. average corn price for 2005-06, and a $2.06/bu. average corn price for 2004-05. USDA is estimating an average on-farm soybean price for 2006-07 of $5.75-6.45/bu., which compares an average price of $5.66/bu. for 2005-06, and $5.74/bu. for 2004-05.

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.