February 25, 2005

 

 

USDA estimate lowers US grain production

 

The US Department of Agriculture Chief Economist Keith Collins said the department forecasts 2005 production for US grain and oilseeds will be down compared to 2004 due to lower acreage and a change in trendline yields.

 

At the annual Agricultural Outlook Forum, Collins said 2005 all-wheat production is estimated at 2.1 billion bushels versus 2.2 billion in 2004. Corn production is estimated at 10.9 billion bushels in 2005 versus 11.8 billion in 2004.

 

Soybean production is estimated at at 2.9 billion bushels in 2005 versus 2004's production of 3.1 billion bushels. Cotton production in 2005 is seen at 18.7 million bales versus 23.0 million bales last year.

 

He said 2005-06 production levels for wheat, corn and soybeans would come in near expected demand and consequently carryover levels would remain the same.

 

"With continued heavy stocks, weaker prices are expected," said Collins.

 

Collins said, "Even with cotton area rising slightly, a decline from 2004's phenomenal yields will sharply reduce production from last season." He said cotton area would rise by about 4% following last year's record-shattering yields, strong program incentives and improving export prospects with China.

 

Corn acreage is expected to replace wheat acreage amid some concerns over Asian soybean rust.

 

But at the same time, Collins said he looks for U.S. soybean planted area to decline by 2.0 million acres, also citing Asian soybean rust concerns and this year's lower prices.

 

Collins said he also looks for a mild increase in cotton and rice acreage of 3%-4%.

 

However, overall output is seen running near equal to demand, which Collins said implies lower prices in 2005 for wheat, corn and soybeans.

 

Looking beyond 2005-06, modest price increases are expected for all major commodities as stocks-to-use ratios continue to decline.

 

Details for these figures will be released later today.