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Few Surprises in USDA Crop Report

posted on February 11, 2005

USDA released its 2005 net farm income forecast on Friday. Following back-to-back record years, net farm income is expected to drop $9.2 billion this year, to $64.4 billion. USDA cautions the drop seems significant primarily because 2004 was such an exceptional year. Unusually high prices for most commodities, especially livestock and milk, pushed net farm income higher by $14.4 billion. That's 24 percent above the 2003 record.

Record crop production also was part of the income equation in 2004. In fact, that was evidenced this week with the release of USDA's February supply and demand report.

Few Surprises in USDA Crop Report There were few surprises in the supply and demand report the USDA released mid-week.

Early reaction to the corn and soybean numbers was neutral to bearish.

Ending stocks in the world corn supply  were raised from 114.96 (M) million tons to 117.27 (M) million tons. The increase reflects bigger coarse grain production estimates for Argentina and Belarus.

Larger corn exports are projected for Argentina and Australia.

For the U.S., the government raised the estimate of corn ending stocks by 50 (M) million bushels ... to 2.010 (B) billion bushels ... which met pre-report trade guesses.

The domestic soybean carryover was estimated at 440 (M) million bushels ... up 5 (M) million bushels from previous reports. Last year at this time, the carryover was estimated at 112 (M) million bushels.

Reaction was slightly bullish to the wheat report. For wheat, the USDA estimate was smaller than expected ... at 558 (M) million bushels. Traders had expected the report to come in at 581 (M) million bushel. Some analysts are saying the shrinking carryover, smaller planted acreage and worries about the soft winter wheat crop should provide traders with enough ammo to get prices up. The USDA raised its projected annual average price for wheat by 3 cents, to $3.38.

Tags: agriculture crops government markets news trade USDA