Iowa Public Television


USDA Crop Reports Move Markets

posted on November 14, 2003

Hello, I'm Mark Pearson.

The laws of supply and demand were in full evidence this week, on both broad and narrow economic fronts.

The government reports retail sales declined for the second straight month in October, as consumer demand for automobiles fell sharply. Wholesale prices in October saw their sharpest increase in seven months, thanks in part to big increases in the price of beef. And demand for foreign goods remains high, as monthly imports climbed to an all-time high in September.

Even so, a weaker dollar and improving economies overseas have pushed U.S. exports higher, as well. That's good news for U.S. farmers, who more than ever must rely on foreign demand to soak up the bounty of their production.


USDA Crop Reports Move Markets

The government released its November Crop Production Report this week. While the numbers may be news for some major commodity producers, the markets, for the most part, were not surprised.

The Agriculture Department is now projecting U.S soybean production at 2.452 billion bushels, down about 1% from last month's guess, but nearly the exact amount of the average trade guess. If realized, it would be the smallest domestic soybean crop since 1996.

Every cloud has its silver lining, however, and the government is calling for higher soybean export numbers. In its monthly supply and demand report, USDA estimates soybean exports at 890 million bushels -- up 20 million bushels from last month. The government cites strong early marketing year shipments, especially to China, as the reason for increased exports.

The decline in domestic soybean production and concurrent rise in exports fueled a substantial rally in nearby soybean prices.

Meanwhile, the agriculture department is forecasting U.S. corn production at a record 10.277 billion bushels, up 70 million bushels from last month's guess, and slightly below the average trade guess of 10.327 billion bushels. The government also is projecting that corn exports will increase by 75 million bushels, citing smaller crops in Argentina and Eastern Europe.

Nearby corn prices also trended higher on the heels of the USDA reports.

Cotton production is forecast at 18.2 million bales, up 4 percent from October and up 6 percent from last year's production. Yield is expected to average a record high 722 pounds per harvested acre, up 26 pounds from last month. If realized, it will be 14 pounds above the previous high yield established in 1994.

USDA estimates ending stocks of wheat are 25 million bushels lower than last month due to stronger-than-expected exports to date. While projected imports and domestic use are unchanged, global ending stocks are down nearly 4 million tons due primarily to lower stocks in India, the U.S., Argentina, the European Union, and Eastern Europe.


Tags: agriculture crops harvest markets news USDA