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"Markets will continue to react to other factors, but these
reports will provide updated fundamental information," said
Darrel Good. The monthly Cattle on Feed report, to be released
on Dec. 23, and the quarterly Hogs and Pigs report, set for
release on Dec. 28, will provide additional information to
assess domestic feed demand.
"The production intentions of hog producers will be of
particular interest," said Good. "The report will reveal whether
producers' modest expansion plans have changed as a result of an
extended period of relatively low feed prices."
Four reports will be released on Jan. 12, 2006. These include
the annual Crop Production report, the quarterly Grain Stocks
report, the monthly World Agricultural Supply and Demand
Estimates report, and the annual Winter Wheat Seedings report.
"The production report will contain the final estimates of
the size of the 2005 corn and soybean crops," said Good.
"Historically, there has been a modest positive relationship
between the change in the corn and soybean production forecasts
in November and the change that has occurred in January.
"Since the forecasts of both crops increased in November of
this year, there is some expectation that another small increase
in crop size will be revealed in the January report. Any change
that occurs, up or down, is not expected to be large enough to
significantly alter the forecasts of surplus year-ending stocks.
Those stocks are expected to be at the highest level in 18
years."
Good added that the report of Dec. 1 inventories of corn and
soybeans will provide further information relative to the rate
of use of the 2005 crops. The report will be especially
important for corn, as it will allow the calculation of the
first-quarter feed and residual use.
"The magnitude of use during the September-through-November
period will be used to project the use for the remainder of the
year," he said. "Any surprises in the magnitude of use during
the quarter would likely result in a change in USDA's current
forecast of 5.875 billion bushels of feed and residual use for
the year."
Assuming no change in the production estimate and assuming
that domestic use of corn is proceeding at the projected rate,
first-quarter corn exports of about 485 million bushels suggest
that Dec. 1, 2005, stocks of corn were near 9.8 billion bushels,
Good noted. Assuming no change in the 2005 production estimate,
Dec. 1 stocks of soybeans should have been near 2.45 billion
bushels.
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The monthly update of world supply and consumption projections will
reflect new information in the Crop Production and Grain Stocks
reports but will also provide new assessments of other important
developments. These include potential South American soybean
production, Chinese corn production, Chinese corn imports and
Chinese soybean imports.
"South American soybean production prospects will be one of the
more important market factors for the next three months," said Good.
Good said that the estimate of winter wheat seedings will
obviously be important for wheat prices, but it also has
implications for corn and soybeans.
"It is expected that the report will show a significant increase
in acreage of soft red winter wheat in the eastern Corn Belt and the
Southeast," he said. "Acreage was reduced last year due to
unfavorable planting conditions. Very good planting conditions in
2005, along with escalating costs of corn and soybean production,
are thought to have stimulated the increase in acreage.
"The magnitude of the increase will have implications for the
total area available to plant the spring-seeded crops, such as corn
and soybeans," said Good. "The debate about how rising production
costs will affect corn and soybean acreage decisions will continue
into the spring of the year."
The cash price of both corn and soybeans has increased
significantly from harvest lows. In central Illinois, for example,
the spot cash price of corn reached a low of $1.635 on Oct. 18 and
posted a high of $1.895 on Dec. 13. The average central Illinois
corn basis strengthened by 32 cents during that period, while
futures prices declined by 6 cents.
The cash price of soybeans reached a low of $5.15 on Oct. 10 and
a high of $5.84 on Dec. 13. The central Illinois basis strengthened
by 40 cents, and January futures gained 29 cents during that period.
"Prices now appear to be settling into a trading range that may
persist into the first of the calendar year," said Good.
[University
of Illinois College of Agricultural, Consumer and Environmental
Sciences news release]
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