Crop Report Summary

The latest USDA Crop Supply and Demand Report, released Jan. 12, gives another indication of just how big the U.S. corn and soybean crop was in 2005, and how large the carry-over grain stocks are as we head into 2006. Following are some highlights of the USDA Crop Report:

Corn:
According to the USDA Report, there was an estimated 75.1 million acres of corn harvested in 2005 with a total production of 11.1 billion bushels of corn. This production level is down from the record production level of 11.8 billion bushels in 2004, but up significantly from 10.1 billion bushels in 2003 and 8.9 billion bushels in 2002. The U.S. harvested corn acres in 2005 were up an estimated 2 percent compared to the 73.6 million acres harvested in 2004, and up significantly from the 70.9 million acres harvested in 2003 and 69.3 million acres harvested in 2002. According to the USDA Report, total corn stocks in the U.S. on Dec. 1, 2005, were projected at 9.81 billion bushels, which up 4 percent from Dec. 1, 2004. The projected corn ending stocks for 2005-2006 are estimated at 2.4 billion bushels, which is up from 2.1 billion bushels for 2004-2005, and 958 million bushels for 2003-2004.

Soybeans:
Total U.S. soybean production in 2005 was estimated to be the second largest on record, only slightly behind the U.S. soybean production totals in 2004. The report estimated total U.S. soybean production in 2005 at 3.08 billion bushels, which compares to 3.12 billion bushels in 2004, and 2.45 billion bushels in 2003. The total harvested soybean acreage in 2005 was estimated at 71.4 million acres, which is down 4 percent from the 73.9 million acres harvested in 2004, and is also lower than the 72.5 million acres harvested in 2003. The USDA Report estimated total U.S. soybean stocks on Dec. 1, 2005, at 2.5 billion bushels, which is 9 percent higher than a year earlier. The projected soybean ending stocks for 2005-2006 are estimated at 505 million bushels, which is up significantly from 256 million bushels for 2004-2005, and 112 million bushels for 2003-2004.

2005 Crop Yields:
The national average corn yield in 2005 was estimated at 147.9 bu./acre, which 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, 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 2005 was 43.3 bu./acre, which is up slightly from the 2004 average yield of 42.5 bu./acre, and up significantly from the 33.9 bu./acre average yield in 2003.

2006 Price Prospects:
Most grain marketing analysts feel that the relatively large levels of projected ending stocks in the latest U.S. Crop Production Report will put downward pressure on corn and soybean prices early in 2006. USDA is estimating an average on-farm price of $1.75-$2.05/ bu. for 2005-2006, which compares to a $2.06/bu. average corn price for 2004-2005, and $2.42/bu. for 2003-2004. USDA is estimating an average on-farm soybean price for 2005-2006 of $5.10-$5.80 per bushel, which compares an average price of $5.74 per bushel for 2004-2005, and $7.34 per bushel for 2003-2004. In addition to the large level of carryover stocks of both corn and soybeans for the coming year, other factors likely to affect the grain markets in the coming months are the size of the South American soybean crop, and the projected levels of the 2006 U.S. corn and soybean acreage. U.S. farmers still have a considerable amount of 2005 corn and soybeans in storage that need to be marketed. The best advice for farm operators in this situation will probably be to take advantage of short-term rallies in the corn and soybean market in the coming months to sell the remaining grain in storage. A big price increase in 2006 is not likely, unless we have major weather problems that negatively affect the 2006 crop.

Editors 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.