Features Agronomy Soybeans
USDA report bullish for corn and beans

June 12, 2008

USDA is projecting a
smaller U.S. corn crop of 11.7 billion bushels,
down 390 million from May based on lower expected average yields of 148.9
bushels per acre. The estimate is 5 bushels below last month’s estimate, and 6
bushels below the 1990-2007 trend.

USDA’s
June 10 Crop Production Report and World Agricultural Supply and Demand
Estimates reflected slow planting progress, slow crop emergence, and
persistent, heavy rainfall across the Corn Belt. The latest rounds of torrential
rainfall are expected to reduce plant populations and nitrogen availability,
particularly for corn planted after mid-May.

Corn
exports are forecast 100 million bushels lower, reflecting tighter U.S. supplies and increased export
competition with higher foreign production. Ending stocks for 2008-09 are
projected at 673 million bushels, down 90 million bushels from last month, and
760 million below the 2007-08 forecast. If realized, 2008-09 ending stocks
would be the lowest since 1995-96.

Soybean
ending stocks for 2008-09 are projected at 175 million bushels, down 10 million
from last month. Production remains unchanged from last month at 3.1 billion
bushels.

USDA
also reduced its estimate of soybean
oil used for biodiesel production for both 2007-08 and 2008-09 as high soybean
oil prices relative to other fats and oils have reduced the soybean oil share
of total biodiesel production
more quickly than expected.

Global
soybean production is projected to increase 10 percent to 240.7 million tons. The
Brazil crop is projected at 64 million tons, up 3 million
tons from 2007-08. The Argentina crop is projected at 48 million
tons, up 1 million tons from 2007-08 based on a small increase in area and
yield.

USDA
raised export projections for cotton
by 500,000 bales to 15 million bales, mainly due to lower foreign production.
Ending stocks were reduced to 5.4 million bales, or 28 percent of use.

USDA’s
world production estimate of 116.4 million bales is 1.6 million bales lower
than last month, with year-to-year declines for the United States, Brazil, Turkey, Central Asia, and Egypt. The declines are partially offset
by increases for India, the African Franc Zone, Australia, and Pakistan. World ending stocks of 54.1
million bales are down about 1.5 million from last month.

U.S. rice exports are projected at 99
million hundredweight. The season-average farm price for 2008-09 is projected
at $16.50 to $17.50 per hundredweight, down $2 per hundredweight on each end
from a month ago. The decline in the price forecast reflects the easing of some
global export restrictions. The 2008-09 price forecast is still at a record
despite the reduction.

Global
2008-09 rice production was lowered 600,000 tons due primarily to a reduction
for Burma. Global ending stocks are projected
at 81.5 million tons, down 1.1 million tons from last month, but up 4 million
tons from 2007-08.

U.S. 2008-09 wheat supplies are projected higher
this month on higher production and increased carryin. Winter wheat production
is forecast 40 million bushels higher with higher yields expected in most
states. Based on June 1 conditions, the U.S. yield is forecast at 45.3 bushels
per acre, up a bushel from last month and 3.1 bushels more than last year.

USDA
raised global wheat production for 2008-09 by 6.9 million tons to a record 663
million tons, prompted by last year’s record prices and relatively good growing
conditions worldwide. World exports were raised 1 million tons.

World
consumption was raised 3.9 million tons mostly reflecting higher feeding and
food use in China and higher feeding in the United States. World ending stocks are projected
8.1 million tons higher this month at 132.1 million tons, up 16.9 million from
2007-08 and the highest since 2005-06.