Until there are signs that consumption is slowing, the trend for higher corn prices will be the norm. That’s the word from Darrel Good, University of Illinois extension marketing specialist.

"Soybean prices will likely continue to follow corn prices," he adds.

USDA's November forecasts for the size of the 2006 corn and soybeans crops were smaller than expected. The 2006 U.S. corn crop is now forecast at 10.475 billion bushels, 160 million bushels below the October forecast and 369 million below the September forecast. That’s also 367 million bushels smaller than the 2005 crop and 1.062 billion bushels smaller than the record crop of 2004.

In addition the smaller corn crop and high prices are expected to reduce feed and residual use to a three-year low and to limit the year-over-year increase in exports.

The U.S. soybean crop is now forecast at a record 3.204 billion bushels, 15 million larger than the October forecast, 141 million larger than the 2005 crop, and 80 million larger than the previous record crop of 2004. The projection of the domestic crush during the current marketing year was increased by five million bushels, to a total of 1.78 billion. Year-ending stocks are projected at 565 million bushels, or 18.3 percent of projected consumption.

"The relatively high price of soybeans is most likely explained by the need for the soybean market to protect its 2007 acreage turf as corn prices move higher. In addition, soybean meal prices are supported by higher corn prices and soybean oil prices are being supported by expectations of rapidly expanding biodiesel production."

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Source: Universityof Illinois