The Interagency Commodity Estimates Agency also expects wheat yields to decline from last year’s record levels, corn yields to be about the same, and soybean yields to improve from last year’s “disappointing levels” – but with a sharp drop in bean prices.
Larger plantings and steady-to-higher yields are expected to result in larger 2004/05 production of corn and soybeans. Lower 2004/05 ending stocks and stable-to-higher prices are expected for wheat and corn, but larger ending stocks and lower prices are forecast for soybeans.
“The larger corn production will be more than offset by expanded industrial use and exports, resulting in a decline in ending stocks and a modest increase from the 2003/04 price,” according to William Tierney, commodity analyst for the World Agricultural Outlook Board, Office of the Chief Economist, USDA, who presented the report.
Although both domestic use and exports of soybeans are expected to rise, “the increase will not be enough to prevent soybean stocks from increasing,” he says. “Consequently, soybean prices are expected to drop sharply, down $1.35 per bushel from the midpoint of the 2003/04 price range.”
World wheat production will rebound, the report says, with large gains expected in the crops of the European Union and the Former Soviet Union. “Increased competition will reduce U.S. wheat exports and U.S. stocks are expected to rise slightly,” Tierney said. “But the 2004/05 wheat price is forecast to be unchanged.”
Combined plantings of soybeans, corn, and wheat are forecast to rise by 1.5 million to 2 million acres over 2003.
Smaller winter wheat plantings for the current crop were due to unfavorable conditions at planting time last fall and new crop prices that were more than 50 cents per bushel below those at planting time in the fall of 2002.
“Strong prices and record net farm income in calendar 2003 are expected to stimulate both corn and soybean plantings,” Tierney says. “Despite the increase in nitrogen fertilizer prices and the highest soybean prices in over seven years, some producers have been disappointed with yields relative to corn in recent years; as a result, corn area is expected to expand more than soybeans.”
Wheat plantings are forecast at 60.5 million acres, down 1.2 million (2 percent) from 2003; total wheat acreage is expected to be the fourth lowest since 1973.
Corn planted area is forecast at 80.5 million acres this year, up about 1.75 million from 2003. “Some of the gain in corn and soybean acreage will be due to farmers planting slightly more crop land than last year,” Tierney says. “Also, despite hot, dry conditions late last summer in some areas, national average corn yields were a record – up more than 9 percent from 2002.
“Given better yield prospects for corn, and attempts to reduce disease and pest problems, there are indications that some corn belt producers are planting two consecutive years of corn, followed by one year of soybeans, or in some cases continuous corn.”
With relatively high prices for soybeans heading into the new planting season, prospects appear good for increased plantings, the report says. Producers are projected to plant a record 74.5 million acres of beans, up just over 1 million acres from last year.
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