Extension Communications
3614 Administrative Services Building
Ames, Iowa 50011-3614
(515) 294-9915
7/2/03
FOR IMMEDIATE RELEASE
Contacts:
Robert Wisner, Ag Economics, (515) 294-6310, rwwisner@iastate.edu
Jean McGuire, Continuing Education and Communication Services, (515) 294-7033,
jmcguire@iastate.edu
USDA Reports Still Leave Room for Grain Price Volatility
The USDA's June 30 grain stocks and crop acreage reports remove some of the uncertainty about grain and soybean supplies for the year ahead. However, Robert Wisner, economist, Iowa State University (ISU) Extension, says continuing uncertainty about yield prospects and limited U.S. and world old-crop reserve supplies will make corn prices potentially responsive to changing weather conditions through late July.
Wisner says cash prices for soybeans will be sensitive both to weather and to weekly export shipments and sales. He added that weekly soybean exports and sales suggest that season total exports will be modestly above recent official projections. That prospect could lead to brief periods of strength in old-crop soybean prices in the next few weeks.
"The June 30 grain stocks report hinted that last year's U.S. soybean crop may have been under-estimated by 20 to 30 million bushels," Wisner said. "But we won't know for sure until late September when the next stocks report is released." He added that the surprisingly large stocks, larger than expected export sales and slightly disappointing domestic soybean crushings suggest to August 31 carryover stocks will be a 2.6 to 2.8 weeks supply. Before the report, grain trade analysts were generally expecting about a 2.2 weeks supply in the ending carryover. Either way, U.S. soybean supplies will be very tight in August and the first half of September.
The U.S. old-crop soybean supplies are indicated to be the tightest since 1972-73," according to Wisner. "That year, soybean prices set an all-time high of $12.90 on the futures market. However, unlike 1972-73, South American supplies on August 31 almost certainly will be large, very likely over a billion bushels." The economist added that South American farmers have sold soybeans more slowly than normal this spring and early summer. Strength of the Brazilian currency has weakened their local prices. But by fall, sales there are likely to increase to provide cash for new-crop plantings.
"While total U.S. corn and soybean planted acreage estimates are near last year, indicated corn acreage for harvest as grain is up nearly 4 percent from 2002, and for soybeans, estimated acreage for harvest as beans is up 1 percent," said Wisner. Late June crop-condition reports indicate the condition of both corn and soybeans in major producing states was only slightly below that of 1994. In 1994, U.S. farmers harvested all-time record corn and soybean yields. A repeat of 1994 yield deviations from trend this year would be expected to produce enough corn to more than double U.S. carryover stocks and considerably more than double soybean stocks. The economist said in that situation, loan rates and management of loan deficiency payments would again become dominant marketing considerations for grain producers.
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