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Projected Record Crops Drive Prices Down

posted on August 6, 2004


For the past seven years, Kansas has worn the crown as the nation's largest producer of wheat. But a group that organizes an annual tour of North Dakota wheat fields says this may be the year that Kansas loses that crown. Part of that prediction is based on the expectation of healthy yields in North Dakota for both the spring wheat and durum crops. It's also based on the anticipation that USDA will LOWER its estimate of the Kansas winter wheat crop in its August 12th forecast.

Regardless of the final numbers, one thing is certain: The harvest on this fall's horizon will be huge, and not just for wheat. The outlook for corn and soybeans also is enormous.

 

Projected Record Crops Drive Prices Down

Analysts predict a bumper crop this year. But, not all news is good. Corn and soybean prices continue to drift lower this week, with futures contracts posting new lows. And, these trends are likely to persist with continued favorable weather and predictions for record production and yields.

While USDA is not scheduled to release its corn and soybean projections until next week, private analysts are saying they expect the 2004 U.S. corn and soybean crops to be larger than in 2003. Indeed, a look back at the past five years is indicative of how good this year's crop is. Typically, crop conditions begin to deteriorate with the dog days of summer. This year, USDA rates 76 percent of the corn crop as being in good or excellent condition. Soybeans, even more susceptible to inclement August weather, also are bucking the trend. USDA reports 70 percent of the soybean crop as good to excellent.

Informa Economics, formerly Sparks Companies, predicts U.S. corn production this year to be a record10.863 billion bushels. While Doanes goes as far as saying the corn crop could reach a whopping 11 billion bushels. Meanwhile, analysts estimate the U.S. soybean crop at more than 2.9 billion bushels. FC Stone, a major U.S. commercial grain brokerage firm, forecasts the 2004-05 corn yield average at 149.1 bushels per acre and the average soybean yield at 40.5 bushels.

Once again, USDA is scheduled to issue its first survey-based corn and soybean crop projections on August 12.

 


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