Extension Communications
3614 Administrative Services Building
Ames, Iowa 50011-3614
(515) 294-9915
4/3/00
Contacts:
Robert Wisner, Extension Economics, (515) 294-6310,
rwwisner@iastate.edu
Elaine Edwards, Extension Communication Systems, (515)
294-5168, eedwards@iastate.edu
Planting Intentions Show Major Caution for Soybean Growers: Prospects for Large Rise in 2001 Carryover Stocks
AMES, Iowa -- The March 31 prospective plantings are a caution to soybean growers that downward price risk is substantial, provided the U.S. average yield is near normal.
"With the intended acreage and a U.S. average yield 0.6 bushels per acre above 1998 (bringing the yield up to 39.5 bushels/acre), a 9.5 percent increase in total utilization from the current level would be needed to prevent an increase in ending-carryover stocks," said Robert Wisner, Iowa State University Extension economist. "That would be a growth rate in soybean usage that is more than double the 4.2 percent average of the last 20 years."
If yields were to recover to the 1994 record of 41.4 bushels/acre, total utilization would need to increase by 14.7 percent from the current marketing year's expected utilization. The 41.4 bushels/acre yield does not contain any adjustment for annual trend increases in yields over the last six years.
"Out of the last 20 soybean marketing years, five had a growth rate exceeding 9.5 percent and were years following short U.S. soybean or world oilseed crops and reduced utilization.," Wisner said. "The year ending this Aug. 31 was not a short crop by either measure. Only one year out of the last 20 has had an increase in total utilization of U.S. soybeans equalling or exceeding 14.7 percent. That year was 1994-95, the year following the 1993 floods and resulting sharp drop in U.S. production, with an accompanying drop in soybean use."
While sharply accelerated demand for U.S. soybeans is possible in the next marketing year, key indicators do not currently point to an increase of this magnitude, the economist noted. South America's soybean harvest was nearly half done at the end of March, and production there is expected to be only a little below last year. Recent U.S. Department of Agriculture (USDA) World Agricultural Outlook Board projections indicate total Brazilian and Argentine soybean and product exports will increase, with a slight draw-down of carryover stocks. Global production of other major oilseeds is projected to increase slightly from 1999.
Corn
Intended U.S. corn plantings, while modestly above grain trade expectations, point to only a small increase in 2001 carryover stocks with normal yields. Normal yields and the intended plantings likely would create a fall price situation for corn similar to last year. "With normal yields, a two percent increase in total domestic utilization and exports of U.S. corn would be needed to prevent a rise in 2001 carryover stocks," Wisner said. An increase of that size or larger has occurred 10 out of the last 20 years, six of which followed short crops the previous year.
Weather remains a potentially key influence on prices through the rest of this year. While long-range forecasts indicate Midwest drought risk is above normal for 2000, a number of significant forecasts indicate the probability of drought over a large area of the Corn Belt is above the long-term average of 15 to 20 percent, but still well below 50 percent. "With both crops, a drought as severe as in 1983 or 1988 would cause a major additional increase in prices," Wisner said.
Closing December 2000 corn futures prices on March 31 were about 68 cents per bushel above last fall's low. November soybean futures at the same time were about $1 above last fall's low.
ml: isufarm
Extension programs are available to all without regard to race, color, national origin, religion, sex, age, or disability.