Over the winter, both farmers and economists have been debating the merits of moving more corn acres into soybeans during 2006 in order to improve profit margins. However, a shift towards soybeans may prove to be the wrong move.

“Current world production and demand prospects seem to be relatively more favorable for corn than for soybeans,” says Darrel Good, a University of Illinois Extension marketing specialist.

U.S. corn export prospects for the remainder of the 2005-06 marketing year and for the 2006-07 marketing year have improved significantly for at least two reasons. “First is the shortfall in production in Argentina,” says Good. “The USDA currently projects the 2006 harvest there at 610 million bushels, about 160 million smaller than the 2005 harvest. Exports from Argentina are expected to decline by an equal amount. Larger reductions are possible.

“Second is the increasing evidence that China will progressively be less of an export competitor and an eventual importer of corn,” adds Good. “Chinese corn exports for the current year are projected at about 235 million bushels. The United States could easily experience an increase of 150 million bushels in export demand from reduced competition from China in the year ahead.”

Domestically, there is a high likelihood of continued rapid expansion in the use of corn for ethanol production. That use is projected at 1.6 billion bushels this year, 277 million more than used last year and 432 million more than used two years ago. “Assuming a trend corn yield in 2006, the increase in corn used for ethanol during the 2006-07 marketing year may be equivalent to production from more than 2.5 million acres,” says Good.

Domestic feed and residual use of corn during the 2006-07 marketing year will also be supported by expanding beef, pork, and poultry production, adds Good. “A modest 2% increase in feed use would be 120 million bushels.”

Leave a Comment

Name (required)

Email (will not be published) (required)

Website