Yesterday, the U.S. Department of Agriculture released two key reports that shed more light on the potential supply of corn and soybeans as the 2007 crop continues to mature. The information contained in these reports, along with their impact on the market price of some program crops, is also of interest to U.S. farm policy makers.

Updating a projected plantings report that was released in March, yesterday’s USDA Acreage Report indicated that, “Corn planted area for all purposes is estimated at 92.9 million acres in 2007, up 19 percent from 2006 and 14 percent higher than 2005. Farmers increased corn plantings 3 percent from their March intentions, resulting in the highest planted area since 1944 when 95.5 million acres were planted for all purposes.”

And with respect to soybeans, the Acreage Report stated that, “The 2007 soybean planted area is estimated at 64.1 million acres, down 15 percent from last year’s record high. Area for harvest, at 63.3 million acres, is also down 15 percent from 2006. This is the lowest planted and harvested area for soybeans since 1995. With the exception of New York, Pennsylvania, and the Southeast States, planted acreage decreased in all States across the country.”

Meanwhile, USDA’s Quarterly Grain Stocks Report, which was also released yesterday, stated that, “Corn stocks in all positions on June 1, 2007 totaled 3.53 billion bushels, down 19 percent from June 1, 2006;” and, “Soybeans stored in all positions on June 1, 2007 totaled 1.09 billion bushels, up 10 percent from June 1, 2006 and the largest June 1 stocks on record.”

To put these reports in perspective, and to analyze what the updated data estimates in these new releases means for U.S. farm policy stakeholders, I turned yesterday to University of Illinois Agricultural Economist Darrel Good.

University of Illinois Agricultural Economist Darrel Good

We talked for about 10 minutes and discussed the historic nature of the reports, as well as the price outlook for some program crops. Dr. Good also tied in what this current production picture means as increased interest in updating renewable fuels mandates stems from Congress, and as the 2007 Farm Bill debate unfolds.

To listen to our conversation, just click here (MP3- 10 minutes).

In other coverage analyzing the USDA reports, Reuters writer Charles Abbott reported yesterday that, “U.S. farmers are on track to grow their biggest corn crop ever, an astonishing 12.8 billion bushels, a government report said on Friday, enough for livestock feeders and the booming fuel ethanol industry.

“‘There will be enough corn,’ Agriculture Secretary Mike Johanns said. ‘It looks to me … some of the pressure went off.’”

Mr. Abbott added that, “‘It’s just incredible,’ said USDA chief economist Keith Collins of the possible huge crop and the prospect of a larger corn stockpile. It meant ‘a little cushion’ against bad weather, he said, and will ‘give livestock feeders some relief.’”

Lauren Etter and Bill Tomson reported in today’s Wall Street Journal that, “The USDA report was much higher than analysts and traders had expected, and Keith Collins, USDA chief economist, said ‘this is a report that’s probably pretty good for everybody.’

“The huge crop could send corn prices lower over the next few months. Still, Greg Wagner, director of marketing risk management for Horizon Ag Strategies, cautioned that ‘we are not out of the weeds yet.’ There is a looming risk that harsh weather could roll through the Midwest and cut into yields, or that a drought in China could send more American corn overseas, keeping prices buoyed.”

Graph from The Wall Street Journal Online.

Philip Brasher and Donelle Eller added in today’s Des Moines Register that, “Farmers saw high prices for corn this spring and planted even more than expected. That may help hold down food prices, but it’s bad news for struggling biodiesel makers who depend on soybean oil.

“The U.S. Department of Agriculture reported Friday that farmers nationwide planted 92.9 million acres of corn this year - 19 percent more than last year and 3 percent more than the government had projected in March. The demand for ethanol led U.S. farmers to plant the most corn since 1944.

“But that extra corn acreage means that farmers planted 15 percent less land to soybeans.

“The price of soybean oil is ‘almost to the point where it’s not economically feasible to make biodiesel,’ said Dan Holesinger, manager of Clinton County Bio Energy.”

And Bill Hord noted in today’s Omaha World Herald that, “November futures for soybeans rose 50 cents to $8.92 Friday after the USDA issued its report. That amount is the maximum allowed in a single day of trading.

“The combination of corn and soybean demand promises at least short-term prosperity for many farmers.

“For the first time in 41 years of farming, there is real market demand for crops, said Sidney, Iowa, farmer Darrel McAlexander.

“Corn and soybeans, the nation’s two biggest crops, are profitable, which should save billions of dollars that otherwise would be spent on federal programs designed to prop up low crop prices.”

Keith Good