Grain Price Outlook issued by Darrel Good
Extension Economist, University of Illinois

USDA reports provided two fundamental surprises for the market over the past three weeks. First, the September Grain Stocks report showed September 1, 2005, inventories of soybeans of 256 million bushels, about 35 million bushels less than expected. Even though the estimate of the 2004 crop was reduced, the current estimate of 3.124 billion bushels still seems too high.

Second, the October Crop Production report reduced the estimate of 2005 planted and harvested acreage by about 900,000 acres. The yield forecast was increased by 2 bushels, to 41.6 bushels per acre, about as expected.

However, the resulting production forecast of 2.967 billion bushels was about 40 million less than expected. Still, supplies for the 2005-06 marketing year appear ample, particularly if the 2006 South American crop is near the projected level of 3.97 billion bushels. That projection is 425 million larger than the 2005 crop that was adversely impacted by drought in southern Brazil.

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