USDA estimates higher prices ahead for soybean meal for the 2008/2009 crop year. The new range is $355 to $415 per ton, up $60. The driver is an expected drop in soybean stocks for this year and into next, according to USDA's World Agriculture Supply and Demand report released on Friday.
The Midwest flooding impact continues to linger. It's the reason that USDA dropped its soybean production, acreage and yield forecasts for this crop season. Along with higher soybean meal prices, USDA raised its 2008/2009 soybean price estimate to $12 to $13.50 per bushel, up $1.
USDA boosted its projected 2007/2008 corn ending stocks by 165 million bushels. The agency cites lower use expected for food, seed, industrial, feed and residual use this year. Livestock market watchers tend to disagree with this assessment.
Ethanol production has been running a bit lighter this year, due to high corn prices than earlier expected. USDA actually lowered its estimated corn use for ethanol production in 2007/2008 by 50 million bushels. Along with high corn prices, ethanol product is down due to reported plant start up delays and construction holds, as well as reduced plant capacity utilization.
USDA raised its 2008/2009 corn price forecast by 20 cents per bushel to an average of $5.50 to $6.50 per bushel. That's up from an expected average of $4.25 to $4.45 per bushel in 2007/2008. Still, it's significantly lower than the market's assessment of prices as illustrated by the futures contract market.
To view the USDA report, click here.