Corn and soybean prices projected to remain high

The average farm corn price for the 2008/09 marketing year is projected by USDA to be $4.60/bu., up 60 cents from the midpoint of 2007/08. Corn supply is projected at 14,263 million bushels for 2008/09, department economists said at USDA’s 2008 Outlook Forum. This is down only 1 percent or 130 million bushels from the current year’s record supplies as higher expected carrying partly offsets lower production. Despite lower area, higher yields in 2008 are expected to limit the year-to-year decline in output. Production is projected at 12,810 million bushels, down 264 million bushels from last year, but still the second highest on record by more than 1 billion bushels. Total corn use is expected to increase only 0.5 percent in 2008/09 as lower feed and residual use and exports mostly offset the rise ethanol use. Domestic disappearance is projected at a record 10,870 million bushels, up 3 percent from the current year as increased ethanol production pushes domestic use higher despite reduced corn feeding.

On soybeans, the season average price is projected at a record $11.50/bu., up from $10.40 in 2007/08. Tighter global oilseed stocks, strong corn and wheat prices, record vegetable oil prices and high soybean meal prices are expected to support record high soybean prices. The department forecasts soybean meal prices for the 2008/09 marketing year to be $300/ton, up from $320/ton in 2007/08.