USDA report no surprise

COLUMBUS – Soybean crops going into the ground this spring could set a record production of 2.985 billion bushels, as prices continue to flounder toward the sub-$4 per bushel range.

The USDA’s monthly supply-and-demand report released May 10 projects a 500 million bushel new-crop carryout, or about two-thirds higher than the estimated 295 million bushel ending stock for the 2000 crop.

The production is based on a 2.2 million acre shift to soybeans and a projected trend line yield of 39.5 bushels per acre. The 2000 yield was 38.1 bushels per acre.

No surprise.

“This report confirms what most people already knew,” said Allan Lines, Ohio State University agricultural economist. “With good crop weather these numbers are reasonable, and I have no reason to believe they will differ that much.”

If USDA’s numbers come true, soybeans being planted now could fetch a price ranging from $3.90 to 4.50 per bushel, slipping away from the $4.40 per bushel estimate for the 2000 crop.

Lines said. however, a generous marketing loan program will shield farmers from supply-and-demand forces, and is probably why farmers shifted so many acres to soybeans anyway.

Corn outlook.

Meanwhile, generally favorable planting weather could hold the corn yield to about 137 bushels per acre, or 0.1 bushel off last year. Total production is estimated at 9.575 billion bushels, or 4 percent less than last year’s 9.968 billion bushel crop.

New-crop carryout is estimated at 1.918 billion bushels, or slightly less than 1.998 billion bushels expected for the old crop.

Still, USDA might be underestimating yield, which could climb to near-record levels if weather remains favorable, Lines said.

“They’re anticipating just a nice big crop either way,” he said. “But with an early crop and good growing conditions for the rest of the year, that 137 bushels per acre yield could move to the 140 bushel per acre level by the end of the growing season.”

The projected price range for corn is $1.65-2.05 bushels per acre, compared to the old-crop price estimate of $1.80-1.90 bushels per acre.

The only bright spot in the report was a projected one-third drop in wheat carryout, from 829,000 bushels to 591,000 bushels. Winter wheat acreage is the lowest since 1978, resulting in an expected lowered production that could push prices near the $3 per bushel level. “The wheat market is going to begin to go,” Lines said. “Don’t be too anxious to price wheat. The U.S. average price for old crop was $2.63 per bushel. New crop is expected to get up to $3.05 per bushel.”

USDA projects Ohio and Indiana wheat production to be 69.3 million bushels and 31.7 million bushels, respectively, down 13.3 percent in Ohio and 9.9 percent in Indiana from last year.

Marketing strategy.

As for corn and soybean marketing strategies, farmers should take advantage of selling opportunities for old crop and avoid pricing new crop, said Chris Hurt, Purdue University agricultural economist.

“Those who have a small portion of their old crop stocks to hold for a potential weather rally should seek a point to sell the cash corn and buy futures or call options, since basis levels could erode in June and July unless weather is a factor,” Hurt said.

“Producers with old crop soybeans should be selling these stocks with weather-related rallies. Those who want to hold into the summer for potential weather problems should consider selling cash beans with the current strong basis and buying futures or call options for upside price potential.”