Key U.S. Crops: Conditions and Prices, Week in Review

From Farm Policy.com:

A University of Illinois Extension article from Monday (“Rapidly Changing Crop Markets,” by Darrel Good) stated that, “Last week there began to be some discussion about the end to the higher price trend in corn and soybean prices. Ironically, that discussion was followed by a move to new contract highs in both markets. [Tell me about it -ed]

The article added that, “What changed? Two developments last week dramatically altered the fundamental situation for corn and soybeans. One was the reversal in crude oil prices. After declining by more than $10 per barrel, crude oil prices rebounded to new highs on June 6. The reversal followed from forecasts of continued upward pressure on prices into the summer months. Sustained high crude oil and gasoline prices would likely keep ethanol prices moving higher and support corn demand.

“The second factor was the widespread heavy precipitation in major corn and soybean producing areas. The ongoing wet weather means further delays in the completion of planting. It now appears likely that not all of the acres intended for corn and soybean production will get planted or re-planted. At a minimum, significant acreage will be planted well beyond the optimum window for obtaining maximum yields.

Whether from smaller planted acreage, smaller harvested acreage, or reduced yields expectations about corn and soybean crop size are being scaled back. With trend yields, the USDA has already forecast a sharp reduction in U.S. corn inventories by the end of the 2008-09 marketing year and the continuation of very tight soybean inventories. If production falls short of expectations, further reductions in corn consumption and rationing of soybean consumption would be required.”>>>MUCH MORE