However, given the increased use since 2007/08, the stocks-to-use ratio is still estimated to be below 5 percent, indicating a tight market. The season average price is forecast to be $13.00 per bushel, a record.

With the restoration of the $1 per gallon biodiesel tax credit on Jan. 1, 2011, biodiesel production is expected to increase. Mandates under the Renewable Fuel Standard call for 800 million gallons produced in 2011 and 1 billion gallons produced in 2012. Assuming that about half of the biodiesel production is from soybean oil, it is forecast that 3.350 billion pounds of soybean oil will be used for methyl ester production in 2011/12 compared to 2.9 billion pounds used in 2010/11.

With renewed demand for biodiesel, soybean oil exports are expected to fall to 1.9 billion pounds, the lowest level since 2006/07. Strong domestic and foreign demand for soybean oil should keep prices high with a forecasted price for 2011/12 of 56.5 cents per pound.

Soybean meal demand remains relatively flat reflecting stable total meat production over the past few years. Prices are estimated to remain high at $360/short ton. This will keep feed costs high and margins narrow for livestock producers.

Rice market to tighten marginally with lower plantings.

Rice plantings will fall to 2.88 million from 3.6 million acres last year. Almost all of the reduction in rice acreage will come from long-grain plantings. With a return to trend yields, the yield for all rice is forecast at 7,225 pounds per acre. Rice production is projected at 206.5 million cwt., down 36.6 million cwt. from last year. Because of the large carry-in from 2010/11, total rice supplies are forecast to be 277.8 million cwt., down 20 million cwt. from last year.

Domestic use for all rice is forecast at 126 million cwt., largely unchanged from last year.

By class, long-grain domestic use is forecast down 3 million cwt., or 3 percent, while medium and short-grain use is forecast to be unchanged. Exports will be pressured by large global supplies and are expected to drop to 111 million cwt., down 5 million cwt. from 2010/11 levels.

Ending stocks are expected to decline to 40.8 million cwt. A stocks-to-use ratio of 17.2 percent means the U.S. market will tighten, particularly for long-grain rice.

The season average price for all rice is expected to rise marginally to $13 per cwt., up from $12.40 per cwt. in 2010/11. For long grain rice, the season average price is expected to rise to $11.50 per cwt. while the season average price for combined medium- and short-grain rice is estimated at $17.75 per cwt., up 4.4 percent from 2010/11 levels.

Cotton stocks to show some rebuilding.

Record prices for cotton will prompt increased cotton plantings worldwide in 2011/12. Global production is forecast at a record 127.5 million bales, an increase of 10.6 percent over this year’s levels. With larger cotton supplies and strong world GDP growth, consumption is expected to rise to 120 million bales, an increase of about 3 percent.

Production gains will outstrip use leading to a rebuilding of global stock levels to over 50 million bales, the highest since 2008/09, but still tight relative to consumption and historical stock averages.

Planted area for upland and extra-long staple cotton is forecast at 13.0 million acres. In 2010/11 cotton farmers enjoyed low abandonment rates and high yields. With drier conditions in the southern plains, the abandonment rate for the 2011 crop should be closer to its long run average rate of 11.2 percent.

Assuming a trend yield of 810 pounds per acre and normal weather, total cotton production is estimated at 19.5 million bales, an increase of almost 7 percent over 2010 levels.