Over the next three months, the prices of corn and soybeans have two major objectives. First, prices must allocate remaining old-crop supplies to maintain at least pipeline stocks by the end of the current marketing year. Second, prices must direct spring planting decisions, says Darrel Good, a University of Illinois agricultural economist.

“For soybeans, the USDA now projects that the combined total of domestic crush and exports during the current marketing year will reach 3.245 billion bushels. That is only 8 million bushels, or 0.25%, less than the total of last year,” he says.

At the projected level of use, year-ending stocks would total only 140 million bushels, or 4.2% of total use that includes seed, feed and residual uses. Year-ending stocks cannot be reduced much below 140 million bushels and still maintain pipeline supplies so total use cannot exceed current projections by a substantial amount, he says.

During the first quarter of the current marketing year, soybean crush and exports totaled 1.063 billion bushels, 82 million (8.4%) more than during the first quarter last year. Use during the remainder of the year then will be limited to about 2.182 billion bushels, which is 90 million bushels (4%) less than use during the same period last year, he notes.

“The pace of consumption clearly needs to decline, and that decline has been occurring. The National Oilseed Processor Association estimates the December 2010 crush by their members was 11.5% below that of December 2009. If the national crush was down 10%, the December 2010 crush was 17 million less than in December 2009,” Good says.

Based on weekly export inspection figures, U.S. soybean exports from Dec. 1, 2010, through Jan. 6, 2011 were 40 million bushels less than that of a year ago. The total of crush and exports since Dec. 1, 2011, was 57 million bushels, or nearly 14%, less than the total of a year ago, he says.

“Soybean consumption has slowed much more than the approximately 4 percent needed to ration current supplies. Consumption for the rest of the year needs to be only 33 million less than that of a year ago,” he says.