The prospect of drought this year is affecting demand for crops that have been harvested as well as planting intentions for 2003. In recent months markets have rallied over the price levels of the past several years. Higher foreign and domestic demand have been key factors in the rise.
But the prospect of increased grain and oilseed production in South American and Ukraine is undermining the potential of sustaining higher prices. And news this week indicates last year's harvest may have been more abundant than previously thought.
Markets on Friday were muted by the release of USDA numbers.
The government now estimates the amount of corn produced last year at a bit over 9 billion bushels, about what the trade was expecting. But projected corn on hand and estimates for ending stocks were higher than most trade guesses. The government's estimate of soybean production in 2002 was well above trade guesses, dampening prices in the soy complex which had been enjoying a run.
Winter wheat seedings of all varieties are projected to be 44.3 million acres. That's below trade expectations.