Iowa Public Television


Fundamentals Set Bears on the Prowl

posted on May 13, 2005

Somewhere in the northern hemisphere this week, a farmer planted the one-billionth acre of biotech seed. That's the guesstimate from Pioneer Hi-Bred International, one of the world's largest producers of genetically modified seed.

At last count, about 85 percent of planted soybean acres ... and 45 percent of planted corn ... were biotech crops.

Planted acres are just part of the equation that determines the bottom line for farmers. Other critical factors in setting commodity prices were revealed this week in USDA's May crop production ... and supply and demand reports.

Long-term, the USDA reports were seen as bullish for soybeans ... and neutral for corn and wheat. But the initial reaction in the pits was anything but friendly.

Here are the numbers:

Soybean production for 2005 was pegged at 2.9 billion bushels, down 8 percent from last year's record crop. USDA put prices in a range of $4.70 to $5.70 a bushel, compared with $5.65 last year.

Projections for this year's corn crop stand at 10.9 billion bushels, down 7 percent from last year. The estimated price range of $1.55 to $1.95 a bushel is down from last year's average of $2.10.

Wheat growers will harvest slightly more than last year, reaping an estimated 2.2 billion bushels. But wheat exports are expected to decline due to increased competition form Europe and the former Soviet Union. Producer prices for wheat are expected to be between $2.55 and $3.05 per bushel -- down substantially from last year's average of $3.39.

As spring planting progresses, the markets increasingly will be influenced by the weather. And as broad bands of rain moved across the grain belt this week, the bears were turned loose in the commodity markets.

Tags: agriculture crops markets news soybeans USDA