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Tight Supplies, Strong Demand Continue
Published Tuesday, May 13, 2008 at 04:47 AM
Farm Bureau senior economist Terry Francl says he is surprised by - the degree to which soybean supplies are tight. For the month of May, the government projects 2008/09 soybean ending stocks of just 185 million bushels, some 85 million bushels less than the average pre-report estimate. Soybean stocks are projected to drop even though it’s believed there will be an 11-million-acre increase in planted and harvested acreage in 2008/09 and a fairly respectable yield of 42 bushels an acre over that time period. Soybean exports are expected decline as domestic use rises only slightly.

The report, released Friday, also showed a slight reduction—of a bushel an acre—in corn yield estimates for the current crop year - compared to a report published in February. Francl points out that - given the slow plantings to date and the likelihood of further delays based on weather forecasts, many observers had thought that yield should be reduced by at least 3 bushels an acre. Francl says - it’s unclear how high prices will go—perhaps $7 a bushel for corn and $15 a bushel for beans—before the rationing process truly sets in.

As for Wheat, this year’s U.S. wheat crop is estimated to total 2.4 billion bushels, up 325 million bushels or 16 percent from 2007. Likewise, world wheat production is estimated to be a record 656 million tons, up 8 percent from 2007. Francl thinks - this may mark a turn around from nearly a decade when the demand for wheat outweighed production, and stocks were constantly drawn down

And for U.S. cotton, projections for 2008/09 indicate sharply lower production of only 14.5 million bales, a decrease of 25 percent and a 43 percent draw down in carryover stocks. Francl says - this is due to the continuing decline in cotton acreage, which is projected to be down this year by about 1.4 million acres from 2007.

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