The new forecasts for corn are generally within the range of expectations, although the market may have been expecting slightly larger production and year-ending stocks estimates. That suggests that this report may serve to stop the decline in corn prices. However, prospects of surplus supplies will likely limit the extent of any price recovery. Unforeseen problems with the South American crop and/or a more rapid consumption pace will likely be needed for any substantial price rally to occur. Longer term, the market seems to think reduced acreage and a smaller U.S. crop in 2014 will provide for some modestly higher prices next year. With such large prevented plantings of corn in 2013, planted acreage fell almost 2 million acres short of intentions reported in March. In addition, it appears that the difference between planted acreage and acreage harvested for grain will be nearly 1 million acres larger than normal. The 3-million-acre shortfall in harvested acreage this year suggests that harvested acreage in 2014 could be near that of 2013, particularly with new-crop corn prices still favoring corn over soybean production in many areas. Expectations of a smaller crop in 2014 seem premature and prices for the 2014 crop may be too high if a decline in production does not occur.

The new forecasts for soybeans point to continued tight domestic supplies. With continued strong Chinese demand for soybeans, it is still questionable if South American production will be large enough in 2014 to supply total world needs. If not, an increase in production may be needed in the U.S. in 2014, pointing to higher prices than now being offered for the 2014 crop in order to attract more acreage.

Read the article at farmdocDaily.


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