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"Strength of demand will be gauged by
the rate of consumption as revealed in weekly, monthly and quarterly
reports and by the development of Southern Hemisphere crops," said
Darrel Good. "These developments will determine if current prices
and current price projections are too high or too low. The prospects
of small year-ending stocks of corn, soybeans and wheat — both in
the United States and the world — may have more implications for
prices next spring and summer than for current prices.
"Unless U.S. crop size is less than
currently projected or demand is much stronger, supplies are
probably large enough to satisfy consumption requirements for this
marketing year at current prices. However, the drawdown in inventory
that is currently expected would leave little or no reserves in case
of a shortfall in production next year. Attention will first focus
on growing conditions in South America and then to prospective
acreage and weather conditions in the United States."
Good’s comments came as he reviewed the
price implications of small carry-over stocks. The USDA projects
that stocks of U.S. corn and wheat at the end of the current year
will be the smallest in seven years. Stocks of soybeans are expected
to be reduced to the lowest level in six years. Based on the
projection of small inventories and on low ratios of projected
stocks to projected consumption, some analysts believe that current
prices are undervalued.
For example, Good noted, the projected
stocks-to-use ratio for corn is 7.5 percent, the lowest since
1995-96 (5 percent), when the U.S. average farm price was $3.24. For
the current year, the USDA projects the average price in a range of
$2.35 to $2.75. For soybeans, the projected stocks-to-use ratio is
about 6 percent, about the same as in 1996-97, when the U.S. average
farm price was $7.35. For the current year, the USDA projects the
average price in a range of $5.15 to $6.05.
"This type of comparison reveals the
shortcomings of the simplistic approach of trying to explain average
prices as a function of year-ending stocks," said Good. "In reality,
consumption, stocks and price are simultaneously determined. Once
crop size is known, maximum consumption during the crop year is
determined, based on the assumption of a minimum level of
year-ending stocks — probably between 4 and 5 percent of ‘normal’
annual consumption of corn and soybeans and about 15 percent for
wheat.
[to top of second column in
this article]
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"The strength of demand, then,
determines the level of price required to match available supplies
with consumption. Strength of demand for U.S. crops is determined by
a number of factors, including the number of livestock being fed,
level of livestock prices, size of crop production in the rest of
the world, exchange rates, processing capacity and price of
processed goods, and U.S. and world economic conditions."
For corn, the current projection of
crop size indicates that if year-ending stocks were reduced to about
5 percent of normal consumption (about 500 million bushels), there
would be about 9.97 billion bushels of U.S. corn available for use
during the current marketing year.
"The largest annual consumption ever
experienced was the 9.817 billion bushels last year," said Good.
"Unless demand is much stronger than currently anticipated, there is
apparently an ample supply of U.S. corn at a ‘modest’ price."
For soybeans, the current U.S.
production forecast suggests that consumption during the current
year would be limited to about 2.724 million bushels if year-ending
stocks were reduced to about 5 percent of "normal" consumption (145
million bushels). That level of consumption is 209 million bushels,
or 7 percent, less than last year’s record consumption. The USDA
expects that consumption will be reduced as a result of higher
prices (an average of $5.15 to $6.05 compared to last year’s average
of $4.35) and weaker demand for U.S. soybeans. Much of the expected
weakness in demand is the result of the projection of a
240-million-bushel increase in South American soybean production in
2003.
For wheat, the USDA crop estimate
suggests that consumption of U.S. wheat during the current marketing
year would be limited to about 2.122 million bushels if year-ending
stocks were reduced to 360 million bushels. That is 47 million (2
percent) less than consumption during the previous year and about
280 million (12 percent) less than the average consumption of about
2.4 billion bushels during the 1990s.
"Demand for
U.S. wheat is expected to remain firm, due in part to unchanged
production in the rest of the world," said Good. "The USDA expects
that the reduction in consumption of U.S. wheat will be accomplished
by higher prices — an average between $3.45 and $4.05 compared to
last year’s average of $2.78."
[U
of I news release]
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The regional conference is sponsored by
the Soil and Water Conservation Society, the SWCS; USDA’s Natural
Resources Conservation Service, the NRCS; and other conservation
organizations.
Special guests from across the country
will share data and perspectives as they debate the challenges
production agriculture and conservation of soil and water resources
face. Discussions will include:
• Shifting history of
conservation and agriculture
• Sustainability in the
Upper Mississippi River Basin
• Relationship of
agriculture and rural communities
• Conservation delivery
systems
• Science behind changes
in agriculture and conservation
• Wildlife and animal
agricultural issues
The conference will include general and
concurrent breakout sessions where lively discussions and
information exchange can occur.
"With guest speakers such as Merlin
Bartz, special assistant to USDA’s undersecretary for natural
resources and environment, there’s tremendous opportunity for
conservation professionals and agricultural leaders to gain new
insights that will impact agriculture for generations to come," says
NRCS Illinois State Conservationist Bill Gradle.
[to top of second column in this
article]
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SWCS President Craig Cox, NRCS Regional
Conservationist Charles Whitmore, EPA Regional Administrator Jim
Gulliford and agricultural futurist Bob Treadway will also address
conference attendees.
The conference includes tours of the
John Deere East Moline Harvester Works and the Mississippi
backwaters, as well as Lock and Dam 15.
SWCS fosters the science and art of
soil, water and related natural resource management to achieve
sustainability. Members from Illinois, Iowa, Minnesota, Missouri and
Wisconsin will attend the conference, and interested agricultural
producers and landowners and the public are also encouraged to
attend. Registration is $125 for SWCS members and $200 for
nonmembers (one-year membership included).
Call (515)
284-4262 or visit
http://news.swcs.org/e_article000041450.cfm
for more details.
[USDA
Natural Resources Conservation Service news release]
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On Tuesday Hugh Whalen, general manager
of East Lincoln Farmer’s Grain Company, said the corn harvest was 45
percent to 50 percent done in the immediate Lincoln area, not so far
along in others.
"We think the harvest overall is about
35 percent done in our territory," Whalen said. "As you get over to
the east, in the Beason area, it’s not so far along. Some corn was
planted late because of the wet spring."
[East
Lincoln elevator manager Hugh Whalen talks with Lincoln area farmer
Carl Schwantz while Schwantz’s son dumps a load of corn.]
The East Lincoln elevator serves the
northwest quarter of Logan County, including Lincoln, Lawndale,
Atlanta, Beason and Johnston Siding.
"Yields are generally good," Whalen
added. "Some are below average and some above average, but all in
all the crop is fairly similar to last year’s. It’s not a
record-breaking year, but it’s much better than the yield in some
areas east and south of us. We got lucky with rain at the right
time.
"The quality of the corn looks pretty
good, too. For the most part, producers are pleased with their
crop."
The corn coming into East Lincoln is
fairly dry, with 18 percent to 19 percent moisture content, and some
is even lower. Sunshine and wind the last few days helped dry it.
Most elevators store corn at 14 percent, he said.
"Farmers are harvesting quickly because
they want to get the corn out while it is still standing and still
dry."
Paul Seaman of the Emden Farmer’s Grain
Company reported Tuesday that corn in his area is 60 percent done,
with variable yields. So far he’s heard of everything from 130
bushels to the acre to 200 bushels, with the majority in the 175 to
180 range. In sandier ground, the yields aren’t quite as good.
"Yields are better than last year. One
producer said he’s gong to be 15 percent better than last year, when
hail reduced the crop in that area," Seaman said.
However, corn in that area is coming in
with a higher moisture content than producers would like, anywhere
from 19 percent to 23 percent, Seaman said.
"We caught some showers in the middle
of August," he said, "but those showers really saved the crop for
guys who had to plant beans late because of the wet spring.
"Most of our producers are pleasantly
surprised by the yield, especially since we didn’t have optimum
conditions," he added.
The Emden elevator serves the northwest
part of Logan County and a small part of southern Tazewell County.
[Elevator
superintendent Doug Conley rakes beans through the grill in the
floor into the pit below.]
"We’ve got just over 50 percent of our
corn in," said Jeff Duckworth, general manager at Hartsburg Grain
Company.
"Corn harvest has gone pretty well,
with an unobstructed three weeks to get it in. The yields are pretty
decent, a little better than last year."
"Corn is wetter, though, because of
late planting due to spring rains. A good portion of our crop was
planted the last of May or the first of June instead of the first of
May. The moisture content is 20 to 22 percent, when it’s usually 17
or 18 percent by the first of October, so we’re doing a lot of
drying."
The Hartsburg area was lucky this year,
Duckworth said. "South and east of here, yields fall off pretty
hard, all the way to Ohio and Tennessee. We’re pretty close to the
edge of where yields turn decent."
The Elkhart Grain Company is about
halfway done with corn, according to general manager Don Ludwig.
"The yield on corn is better than we
probably could have expected, and better than last year, when the
average was only 151 bushels per acre.
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this article]
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"The yield is extremely variable, from
the 120s to the 180s. Overall my guess would be that we’ll end up in
the 160s, which is average in our area. We would get very excited at
yields of 180 bushels per acre," he said.
The moisture content of corn in the
Elkhart area is variable, too. "We had 14.7 percent for some
April-planted corn, but we have some corn at over 22 percent. Some
corn planted late hasn’t been harvested yet; a lot was planted the
end of May and early June. That will probably come in on the wet
side, in the low 20s."
Ludwig said the southwest part of the
county didn’t get as much rain as some other areas.
"The Burton View and Emden areas had
better rain than we did. And when we were getting two-tenths or
three-tenths of an inch, Lincoln was getting eight- or nine-tenths.
But we were very fortunate we got what we did. The rain we got in
mid-July was a lifesaver for late-planted corn," he said.
"We are just on the edge of the
territory where yields are good. They drop off just east of here.
Our corn is better than corn on the other side of Decatur.
"Most producers are very, very pleased
with the corn yields, not because it’s the best they’ve ever had,
but because it’s better than they expected," Ludwig said.
Mark Hunsley at Burtonview Co-op, on
the west side of Lincoln, reported Tuesday that about half the corn
harvest in his area is in, and beans are just starting. Corn is
drying quickly, coming in with 18 percent to 19 percent moisture, he
said.
"The harvest is as good as last year,
if not a little better. We’ve had good rain; every time it rained
around here, we got rain. Our crop is not a record-breaker, but it’s
good."
[Photos by Joan Crabb]
[The
East Lincoln Farmer’s Grain Company elevator at Kruger Road is ready
for trucks and wagons to come in filled with grain.]
The soybean crop is just starting to
come in at East Lincoln, Whalen said, and if early beans are any
indication, the harvest should be as good as it was last year. About
15 percent of the crop is in.
Seaman said about 30 percent to 35
percent of the beans in the Emden area are in. He said it’s hard to
say how the yield is, but it’s probably going to be better than last
year. So far it looks "decent," in the mid-40s to lower 50s. Sixty
bushels per acre is a very good yield.
At the Hartsburg elevator, Duckworth is
seeing some beans that aren’t looking good. "Late rains seem to have
brought some disease in the beans. So far yields are variable."
The bean harvest has just barely
started in the Elkhart area, Ludwig said.
Prices for both corn and beans are not
as high as they were when the harvest started, but they’re better
than they were last year, according to Whalen.
Corn prices are about 50 cents higher
than last year. On Tuesday corn was at $2.43 cents a bushel, he
said. Bean prices have dropped in the last few days, down to $5.22
per bushel. That’s better than last year, but not what most people
would consider a good price, he said.
"When the harvest first started, corn
prices were up in the $2.70s," Seaman said. They were in the $2.60s
the first part of September, but we got a cash bid today for only
$2.41.
"Beans took a big hit, too. The market
slipped 60 cents in the last three weeks. Not many people are buying
beans just now. Buyers have bought more corn than beans," Seaman
said.
"Good market
demand could raise the prices later in the year, but it’s fair to
say we don’t expect to see any huge surprises," Ludwig said.
[Joan Crabb] |
