Hopes
for a rebound in crop prices fell Wednesday after the government projected
a growing global glut of corn, wheat and soybeans.
Soybeans were hit especially hard when the U.S.
Department of Agriculture lowered projections for export demand and
domestic usage.
The USDA also cut its estimates of the size of the
1999 U.S. soybean crop by nearly 1 percent. The new projection is
that 2.67 billion bushels will be harvested this year, down from last
month's 2.7 billion bushels.
The lower usage projections more than offset the
production decrease, causing the USDA to increase the estimate of
the amount of this year's crop that will still be unused next Aug.
31, the end of the current marketing year. The USDA predicted a carryover
of 395 million bushels, up 10 million bushels from the October estimate.
"The production cut was a little bigger than expected,
but not enough to offset the reduced demand factor," said Doug Hjort,
a market analyst and owner of Hjort Associates in West Des Moines.
Crop experts blamed adverse weather for the reduced
soybean crop. Some also said yield losses were linked to the use of
genetically engineered soybean seed.
Commodity markets responded swiftly. January soybean
futures fell 13 cents Wednesday on the Chicago Board of Trade, closing
at $4.66 per bushel. December corn futures also closed lower, down
5 ½ cents to settle at $1.95 ¼.
In Iowa, cash prices also were lower Wednesday.
Corn prices statewide fell between 3 and 7 cents per bushel, while
soybean prices were down 10 and 15 cents. The statewide average cash
price for corn was $1.62 per bushel. The average cash price for beans
was $4.22.
Analysts viewed the crop production report as negative
for both corn and soybeans. |
"The
market was sitting on fragile ground anyway, and so this report was
just enough to put us down to another level," said Don Roose, president
of U.S. Commodities Inc. in West Des Moines. A rebound in prices will
hinge on adverse weather here or in other major producing nations
or a major change in federal farm policy, such as mandatory acreage
reduction, he and other analysts said.
No
one knows what market prices will do, but analysts voiced little optimism.
The USDA reduced its wheat production estimate,
projecting a 2.3 billion bushel crop, down 10 million bushels from
the October report, but increased the corn production figure to 9.54
billion bushels, an increase of 70 million bushels.
Once again, Iowa is poised to maintain its position
as the No. 1 corn- and soybean-producing state in the nation. The
USDA said Iowa farmers harvested 1.76 billion bushels of corn and
488 million bushels of soybeans - in both cases, more than 18 percent
of the U.S. totals.
Illinois was second in corn with 1.55
billion bushels, followed by Nebraska with 1.16 billion bushels. Illinois
was also second in soybeans with 462 million bushels, followed by
Minnesota with 283 million bushels.
If the projections hold up, the 1999 U.S. corn and
soybean crops would be the third-largest on record. Earlier predictions
called for a record soybean crop.
The government lowered its price projections for
the marketing year. For soybeans, it forecast a range of $4.60 to
$5.10 per bushel, down 15 cents from a month ago. For corn, the USDA
trimmed a nickel off its October forecast, predicting a range of $1.60
to $2 per bushel. |
