The 2005 corn and soybean crops will be small enough that year ending stocks will likely be reduced significantly during the year ahead. Will the crops be large enough to allow consumption to continue at the current record pace, or will production be small enough to require a reduction in use?

Darrel Good, Extension Economist with the University of Illinois, says the prospects of reduced inventories should result in higher corn and soybean prices during the 2005-06 marketing year than the prices experienced during the current year. However, the increase may be modest unless the crops are small enough to require "rationing," adds Good. In the case of corn, a modest decline in use of U.S. crops was required in the 2002-03 marketing year due to a crop of just under 9 billion bushels.

Good says in the case of soybeans, 2003-04 was the most recent year in which the consumption of U.S. soybeans had to be reduced because of a shortfall in production. The small U.S. crop was also accompanied by a smaller-than-expected South American crop so that crush prices above $10 were required to ration supplies.

Good also says for the 2005-06 U.S. corn marketing year, the USDA projects total use of corn at 10.67 billion bushels about equal to use during the current year. That projection includes a 7 percent increase in exports and a 6 percent increase in the domestic processing use of corn.

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