May 16, 2002

Market Advisor: USDA’s Projections for 2002 Crops

By George Flaskerud, Crops Economist
NDSU Extension Service

Nearly unchanged to modestly higher wheat, corn and soybean prices were projected for 2002-03 by the U.S. Department of Agriculture in the Supply and Demand Report released May 10. If the projections are correct, this will be the first annual price increase for soybeans in six years.

Using mid-range projections, a seasonal average farm price of $2.80 was projected for wheat versus $2.78 this past year. For corn, $1.95 was projected versus $1.90 this past year, and for soybeans the projection was $4.45 versus $4.24 this past year.

The outlook for wheat is a smaller crop, reduced use and lower ending stocks. The decrease in production was projected largely because of reduced planted and especially harvested acres. The average yield was projected to decrease by only one-tenth of a bushel from last year. Food use was projected to be up but feeding was projected to be unchanged. Unfortunately, USDA is looking for dismal exports -- a decrease of 100 million bushels was projected. The 875 million bushels projected would be the lowest since 1971-72.

USDA projected hard red winter wheat production at 717 million bushels, down 6 percent from a year ago. Soft red winter wheat is expected to total 373 million bushels, down 7 percent. A white winter wheat crop of 211 million bushels was projected, up 8 percent. Spring wheat production and balance sheet projections by class will first be published in the July 11 report.

A world wheat crop of 596 million tons was projected, up about 15 million tons or 2.6 percent from a year ago with the biggest gains coming from the European Union. Domestic use is also expected to be up, so ending stocks are expected to remain almost unchanged. World trade is expected to be down slightly.

The outlook for corn is a larger crop, increased use and a decrease in ending stocks. The increase in production reflects an increase in planted acres. Yields were projected to be down slightly. Only feed use is expected to be down; the other areas of use, food, seed, industrial use and exports, are expected to be up.

Larger corn exports are due primarily to the situation in South America. Dryness has reduced the 2001-02 crop in Brazil. In addition, producers in Argentina are expected to shift acres from corn to more profitable crops in 2002-03. Less competition is also expected from China, since its stocks are dwindling even though production is expected to increase.

The outlook for soybeans is for a smaller crop, larger crush, reduced exports and lower ending stocks. Increased competition is expected in the world market. Foreign oilseed production was projected to be up about 7 million tons to 243 million tons.

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Source: George Flaskerud, (701) 231-7377, gflasker@ndsuext.nodak.edu 
Editor: Tom Jirik, (701) 231-9629,  tjirik@ndsuext.nodak.edu