May 15, 2003

 

Market Advisor: Lower Prices Projected for 2003 Crops

By George Flaskerud, Crops Economist
NDSU Extension Service

Lower wheat, corn and soybeans prices were projected for 2003-2004 by USDA in its Supply and Demand Report released May 12. Using mid-range projections, a seasonal average farm price of $3.35 was projected for wheat versus $3.56 this past year. For corn, $2.10 was projected versus $2.30 this past year, and for soybeans, the projection was $4.95 versus $5.50 this past year.

For wheat, the outlook is for a larger crop, increased use and somewhat higher ending stocks. The increase in production was projected because of increased planted and especially harvested acres. Also, the yield was projected to be 40.1 bushels per acre versus 35.3 a year ago.

Wheat food use was projected to be down slightly but feed use was projected to be up by 50 million bushels due to higher corn prices. USDA is looking for an increase of 75 million bushels in exports because of almost a 75 percent reduction in exports projected for Russia, Ukraine, India and Eastern Europe. Other major exporters are expected to increase their exports too, except for the European Union (EU) which is projected to have a smaller crop this year. North Africa production is projected to be up sharply with imports down accordingly which is likely to impact U.S. durum exports.

USDA projected hard red winter wheat production at 942 million bushels, up 55 percent from a year ago. Soft red winter wheat is expected to total 372 million bushels, up 12 percent. A white winter wheat crop of 250 million bushels was projected, up 24 percent. Spring wheat production and balance sheet projections by class will first be published in the July 11 report.

A world wheat crop of 570 million tons was projected, up about 5 million tons with big gains projected for Australia and Canada and big reductions projected for Russia and the Ukraine. Even with reduced consumption, ending stocks were projected to decrease by 22 million tons to 134 million tons. World trade is expected to be down 5 percent.

The outlook for corn is for a larger crop, increased use and an increase in ending stocks. The increase in production reflects an increase in harvested acres and a much higher yield.

Only feed use of corn is expected to be down, the other areas of use are expected to be up: food, seed and industrial use and exports. Larger corn exports are expected because of less competition from China and other corn exporters and because of reduced world wheat supplies. World corn ending stocks were projected to decrease by about 6 million tons to 92 million tons. World coarse grain ending stocks were projected to decrease by almost 8 million tons.

The outlook for soybeans is for a larger crop, larger crush, reduced exports and higher ending stocks. Increased competition is expected in the world market. Foreign oilseed production was projected to be up by more than 13 million tons (5.6 percent).

For the 2002-03 marketing year, several refinements were made in projections. Hard red spring wheat imports were increased by 3 million bushels, corn exports were reduced by 50 million bushels, and soybean total use was increased by 12 million bushels.

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