NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665

November 5, 1998

The Market Advisor: Large Market Needed for Large Corn Crop

George Flaskerud, Extension Crops Economist
NDSU Extension Service

The second largest corn crop in history is being harvested in the United States, and the largest ever in North Dakota, according to USDA's October Crop Production Report. The U.S. production estimate remained essentially unchanged from the September projection.

The large crop has resulted in a much lower corn price than a year ago. USDA is projecting a seasonal average farm price of $1.80 to $2.20, versus $2.45 for the marketing year which ended Sept. 1.

The lower price is expected to stimulate use of corn, both in the United States and abroad. Domestic use is projected to increase by 264 million bushels, relative to a year ago, and exports are projected to increase by 135 million bushels.

Exports will not recover anywhere close to the level projected just 18 months ago by USDA for this past marketing year. That projection for the marketing year just completed was made before economic problems developed in Asia.

Asian countries are important markets for U.S. corn. Wheat and soybeans are less affected. To illustrate, consider USDA's projected exports prior to when problems developed in Asia. In May 1997, USDA projected exports for the 1997-98 marketing year of 1 billion bushels for wheat, 2.05 billion for corn and 890 million for soybeans. As of October 1998, USDA estimates that 197-98 marketing year exports were 1.04 billion for wheat, 1.515 billion for corn and 877 million for soybeans. Exports fell short of expectations by 535 million for corn and 13 million for soybeans. Most of the decreases can be attributed to reduced imports by Asia.

The consensus in the trade appears to be that several years will be required for Asia to recover from its financial difficulties and regain import levels. Two years of lost exports could exceed a billion bushels of corn. To put that in perspective, carryover corn stocks for the current marketing year are expected to be 1.71 billion, or more than double what they might have been with normal imports by Asia. Think of the difference that makes in the corn price.

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Source: George Flaskerud (701) 231-7377

Editor: Dean Hulse (701) 231-6136