O´Brien notes that the United States had accumulated relatively large wheat supplies that will weigh on domestic wheat prices - absent major unforeseen influences from outside currency, financial or other grain markets.
He points to USDA data that showed U.S. corn production in 2009 reached 13.2 billion bushels-- 1 percent above the 2007 record of 13 billion bushels and 9 percent higher than 2008. Corn yields reached an all-time high in 2009 at 165.2 bushels per acre. Planted area, at 86.5 million acres, is the second highest since 1949, behind 2007´s 93.5 million acres.
"Prospects and possibilities for higher U.S. corn prices have been diminished by the larger projected size of the 2009 U.S. crop," O´Brien says. "To the degree that larger supplies may have diminished the sensitivity of corn market participants to potential weather-
related crop threats in the 2010 growing season, prospects for market volatility and higher prices may be more limited now than before the January 2010 reports. However, any whittling down of the 2009 corn crop size in USDA reports throughout 2010 will be a supportive factor for U.S. corn prices."
Still, there remains uncertainty over the final size of the 2009 U.S. corn crop, as USDA estimated the U.S. corn harvest to be 95 percent complete on Dec. 20. Winter storms have severely limited harvest progress in some areas since then. "If 5 percent of the U.S. crop is still unharvested, that would amount to approximately 3.98 million acres," O'Brien notes. At the U.S. average yield of 165.2 bushels per acre, this amounts to 657.5 million bushels of the 2009 U.S. corn crop that still remains unharvested in 2010.
"Whatever portion of this final 5 percent of the 2009 corn crop that may be unrecoverable or suffers from significant declines in quality while remaining in the field, it is likely to reduce the final 2009 estimate in future USDA Supply and Demand Reports as well as corn ending stocks projections for the 2009/2010 marketing year," he adds.
USDA reported that the 2009 soybean crop broke records for planted and harvested area as well as for yield and production. Soybean production totaled 3.36 billion bushels, up 13 percent from 2008 and up 5 percent from the 2006 record. Average yield per acre is 44 bushels, up 0.9 bushels from the previous record set in 2005. Farmers nationwide planted a total of 77.5 million soybean acres and harvested 76.4 million acres in 2009, both up 2 percent from the record set last year.
"Soybean old crop price prospects in the United States are expected to diminish -- perhaps markedly -- once South American soybean exports become available to the world market in the spring months," O´Brien notes. "Given the need for adequate corn and soybean acreage in 2010, it's still likely that there will be positive support for new crop CBOT 2010 December corn futures and November soybean futures - at least until the market is satisfied that adequate U.S. acreage is allocated to each crop sometime in early summer."
Grain sorghum production, at 383 million bushels, is down 19 percent from 2008, according to USDA. Sorghum yields, at 69.4 bushels per acre, are down 4.4 bushels from last year. Planted area totaled 6.63 million acres, the third lowest on record, while harvested area is 5.52 million acres, down 24 percent from 2008.
USDA also projected fall-seeded U.S. winter wheat area for harvest in 2010 at 37,097,000 acres. "This acreage figure is the lowest since 1913, and down 14 percent from 2009." O´Brien says. "Sizable decreases in seeded acreage are estimated for U.S. hard red winter wheat and soft red winter wheat, with a small decrease in white winter wheat. Seeded acreage for durum wheat in the western United States is lower, but with only a limited number of states having been seeded to date."
Seeded area for hard red winter wheat is expected to be 27.8 million acres in the United States for 2010, down 12 percent from the previous year. A combination of late row crop harvest, poor weather conditions at seeding and relatively low prices and income prospects for wheat compared to other available crop enterprises were cited as reasons for the acreage decline, O´Brien notes.
"Finally," O´Brien says, "once the U.S. corn and soybean crops are planted, any serious potential weather threats to the U.S. feedgrain and oilseed crops would impact the grain markets. Supplies of both U.S. corn and soybeans are not as burdensome to domestic and global markets as for wheat, and the United States remains an important leading supplier of world feedgrain and oilseed exports. Bidding for U.S. crop acres between corn and soybeans, and potential weather threats would still be likely to support U.S. grain prices during 2010."
Source: Kansas State University