Milling & Baking News - November 23, 2004 - 15

Service of the U.S.D.A. on Nov. 12 projected 2004 U.S. corn production at a
record 11,740,920,000 bus, up 127,694,000
bus, or 1%, from the October estimate of
11,613,226,000 bus and up 1,627,033,000 bus,
or 16%, from the previous record outturn of
10,113,887,000 bus in 2003. Before 2003, the
U.S. corn crop had exceeded 10 billion bus
only once, at 10,050 million in 1994.
Based on Nov. 1 conditions, the U.S.D.A.
forecast a record corn yield of 160.2 bus per
acre, up 1.8 bus from 158.4 bus per acre as
the October forecast and up 18 bus from the
old record of 142.2 bus per acre in 2003.
"Across the U.S., yields are forecast at
record-high levels in 19 of the 33 published
corn states," the U.S.D.A. said in comments
accompanying its November crop production report.
In its Nov. 12 supply and demand report,
the U.S.D.A. increased the projected carryover of corn on Sept. 1, 2005, in the United
States to 1,819 million bus, up 128 million
bus from 1,691 million as the October forecast and up 861 million bus from 958 million
bus in 2004.
Meanwhile, 2004-05 global coarse grain
production was projected at a record 985
million tonnes on Nov. 12, up 9% from 200304, according to the U.S.D.A. Of that total,
corn was projected to account for 691 million tonnes, up 72 million tonnes, or 12%,
from 2003-04.
Corn futures prices for the December
2004 contract had been at $2.44¼ a bu on
Nov. 21, 2003. A new contract low of $1.95½
a bu was set Nov. 12, 2004, after what was
termed a bearish November crop production report.
But the downside potential for corn
prices appears limited, said Steve Freed,
vice-president, ADM Investor Services,
Chicago. Mr. Freed said that although he
expects May corn futures, currently around
$2.20 a bu, to slip to the $2 range, "it will be
hard to go under $2 a bu" because strong
domestic and foreign demand for corn will
provide support.
"We need an 11-billion-bu crop to satisfy
demand," he said.
The U.S.D.A. on Nov. 12 projected total
use of U.S. corn for 2004-05 at 10,895 million bus, unchanged from October but up
638 million bus, or 6%, from 2003-04. World
corn use (domestic demand plus exports)
was projected at 756.39 million tonnes, up
36.61 million, or 5%, from 2003-04.
Use of corn for ethanol production in the
United States was projected at 1,370 million
bus, up 166 million bus, or 14%, from 200304. Ethanol production, spurred by soaring

bakingbusiness.com / world-grain.com

gasoline prices and new production facilities
coming on line, was a record 225,000 barrels
per day in August, according to a report
from the American Coalition for Ethanol.
Ethanol production for 2004 was projected
at 3.25 billion gallons, up 16% from 2003,
according to the Energy Information Administration (E.I.A.) of the U.S. Department
of Energy.
The
average
farm price of
corn for 2004-05
was
projected
by the U.S.D.A.
in November at
$1.70@2.10 a bu,
down 5c from its
October forecast
and
compared
with $2.42 a bu last
year. The average
price received by
farmers for corn in
October was $1.89
per bu, down 31c
from $2.20 in September and 23c below the October 2003 price
of $2.12, according to the latest Agricultural
Prices report from the U.S.D.A.
Corn meal prices dipped as the new corn
crop came to market this fall. The price in
the first half of November slid to a 2½-year
low of $11.49 a cwt. That price was down
$2.54 from the year's high of $14.03 a cwt
set in early April and was down 87c from a
year ago. Perhaps more important was that
prices had been trending upward at this
time last year, pushing ingredient costs for
cereal and snack manufacturers higher.
This year, while prices might not trend
much lower, there also appeared to be limited upside potential. As a result, some buyers have opted to cover needs only a quarter
ahead, while others have booked a full year
out to guarantee the savings. Mr. Freed recommended that users cover corn product
needs at least six months ahead, in part
because of growing ethanol production, but
also because of overall strong demand.
Yet another difference with this year's
corn crop appears to be its milling quality.
Corn millers have reported excellent quality even in initial deliveries of new crop
corn, which has allowed them to produce
a higher percentage of larger grits per bu
ground than a year ago. The larger grits are
used by cereal makers. Some mills battled
quality issues with the entire 2003 crop.

Soybean prices still could go lower
The 2004 soybean crop was projected at

a record 3,150,441,000 bus, up 43,580,000
bus, or 1%, from the October estimate of
3,106,861,000 bus and up 696,776,000 bus, or
28%, from 2,453,665,000 bus in 2003. If the
projection is realized, the 2004 soybean crop
would surpass by 9% the previous record
outturn of 2,890,682,000 bus in 2001.
The U.S.D.A. projected the 2004 soybean

yield at a record 42.6 bu per acre, up 0.6 bu
from 42 bu per acre as the October forecast
and up 8.7 bus from 33.9 bu per acre last
year. The 2004 yield surpassed the previous
record of 41.4 bu per acre set in 1994.
The soybean carryover in the United
States on Sept. 1, 2005, was projected at 460
million bus, up 55 million bus from the October forecast and up 348 million bus from
112 million bus in 2004. The carryover projected for the current marketing year was
the highest since 1986. In contrast, the 2004
carryover was the lowest since 1976.
Soybean crush for 2004-05 was projected
at 1,645 million bus, the second largest ever
and up 115 million bus from 1,530 million
bus in 2003-04. Some soybean processing
facilities were temporarily shut down this
summer because soybean supplies ran
low and crush margins were unfavorable.
But this scenario should not be repeated in
2004-05, analysts said.
November soybean futures on Oct.
29 closed at $5.27½ a bu, compared with
$7.94¼ a bu on Oct. 31, 2003. Soybean meal
futures prices for the December contract
were at $153.90 a ton on Oct. 31, compared
with $252.10 a ton a year ago.
But the trend for soybeans is still lower,
Mr. Freed said.
"May soybean futures have the potential to decline to $4.50 a bu in the January-March period," Mr. Freed predicted.
By that time, both export demand and the
size of the South American crop will be bet-

Milling & Baking News, November 23, 2004 / 15

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - November 23, 2004

Table of Contents for the Digital Edition of Milling & Baking News - November 23, 2004