6/2/2005 Delta Farm Press - The United States has ample, exportablesupplies on hand in several major commodities at the same time worldsupplies in those commodities are falling. This could be positive for U.S.exports of rice, corn and soybeans in 2005-06, according to a marketanalyst.

Charlie Ross, a broker with Rosenthal Collins Group, LLC, and president ofRoss Risk Management, LLC, a cash grain and cotton marketing service,talked about the implications of USDA's May 12 World Agricultural Supplyand Demand Estimates on U.S. commodity prices at the Ag Market Network'sMay teleconference.

Here are highlights of the report and Ross's analysis:

Corn: In its May 12 supply and demand estimates, USDA projects that2005-06 U.S. corn use will expand, as higher exports will offset thedecline in domestic use, which is down 40 million bushels, due to reducedfeed and residual use. Feed and residual use declined because of increaseduse of non-grain feed ingredients.

Food, seed and industrial use in corn is up due to increased use toproduce ethanol. Corn exports are up 150 million bushels because of lesscompetition in the world.

U.S. corn acres are expected to be up slightly, with yield averaging 148bushels per acre, 12 bushels less than last year's 160-bushel yield.

With supplies exceeding use, ending stocks of U.S. corn are projected at2.54 billion bushels, up 325 million bushels from last year, the largestsince 1987-88. The projected price range for corn is $1.55 to $1.95,compared to $2 to $2.10 for last year.

USDA also projects a decrease in world production, lower use and amoderate drop in corn stocks, especially in China. "Ending stocks areexpected to drop from 44.85 million metric tons to 25.6 million metrictons, a decrease of over 19 million metric tons," Ross said. "This couldchange some export pictures. The bottom line is that we need to produce abig crop in the United States."

If China does become a significant importer of corn this year, ìit's notall gloom and doom for corn in terms of our production and the world'sneeds. We're approaching some value levels in corn.î

Soybeans: Highlights of the USDA report on soybeans include an endingstocks projection of 290 million bushels. This is lower than previousestimates because of an increase in crush and exports.

Large U.S. soybean supplies combined with lower-than-expected Brazilianstocks this fall are expected to boost U.S. soybean exports to recordlevels, projected at 1.125 billion bushels in 2005-06.

Globally, oilseed production is expected to decline for the secondstraight year, the first time this has happened since 1995-96.

"The United States has been reducing stocks at a very rapid rate," Rosssaid. "That leaves us with no room for error this year in the U.S. soybeancrop. We still have all the weather ahead of us, and who knows what'sgoing to happen with rust. It's getting to be a very interesting marketfor soybeans."

Ross says that November beans under ideal growing conditions could slideto $5.50 on the downside. If weather is less than favorable, rust takes atoll on the crop and the funds start aggressively purchasing, Novembercould approach $7, and possibly higher.