October 13, 2003



USDA Crop Production Forecasts Caught Many Off Guard


USDA crop production forecasts released on last Friday morning caught many people off guard due to the magnitude of the changes. Soybean production in the US this year is now projected at just 2.468 billion bushels, down sharply from an average of analysts' estimates for 2.578 billion and well below USDA's forecast in September for 2.643 billion bushels. The number sent soybean prices at the Chicago Board of Trade Friday to $7.36 per bushel, the highest level since November 1997.

Meantime, corn prices were down on the new production estimate, which was raised to bin-buster proportions. If realized, USDA's new figure of 10.207 billion bushels would beat out the 1994 corn crop as the largest on record. Ahead of the report, analysts' estimates were for a 10.049 billion bushel crop.

Following are some highlights of USDA's October Crop Production report:



Production - 2.47 billion bushels, down 7% from the September forecast and 10% below 2002.


Yields - 34.0 bushels per acre, down 2.4 bushels from September and down 4.0 bushels from 2002.


Acreage - area planted is estimated at 73.6 million acres, down 68,000 acres from the August estimate. Area for harvest is forecast at 72.5 million acres, down 88,000 acres from September, but up fractionally from the 2002 acreage.

If realized, this year's production would be the lowest since 1996.



Production - 10.2 billion bushels, up 3% from last month and 13% above 2002.


Yields - 142.2 bushels per acre, up 3.7 bushels from September and up 12.2 bushels from last year.


Acreage - farmers now expect to harvest 71.8 million acres of corn for grain, down 50,000 acres from September but up 4% from 2002.

If realized, corn production and yield would both be the largest ever. Both records were set in 1994 when production was estimated at 10.1 billion bushels and the yield was 138.6 bushels per acre.

The World Agricultural Supply and Demand Estimate, also released on last Friday morning, shows tighter ending stocks for soybeans and wheat, and even greater ending stocks of corn. Following are some highlights from that report:



Projected soybean supplies are the lowest since 1996/97.


Soybean ending stocks for 2003/04 are reduced 5 million bushels this month to 130 million bushels.


Soybean exports are reduced 70 million bushels to 870 million bushels due to reduced domestic supplies and larger foreign production.


Oilseed ending stocks for 2003/04 are projected at 4.5 million tons, down slightly from last month.


Oilseed production for 2003/04 is forecast at 76.7 million tons, down 4.8 million tons, mainly due to reductions for soybeans and sunflower seed.


Season-average soybean prices are projected at $6.05 to $6.95 per bushel compared with $5.25 to $6.15 last month. Soybean meal prices are projected at $185 to $215 per short ton, up 15 dollars on both ends of the range. Soybean oil prices are higher at 23.5 to 26.5 cents per pound, compared with 20 to 23 cents last month.



Projected corn ending stocks are up 289 million bushels from last month.


All feed grain stocks are up 7.7 million tons from last month.


The projected price range for corn is reduced 20 cents on each end to $1.90 to $2.30 per bushel.


Feed grain outlook for 2003/04 - larger beginning stocks, larger production, increased use, and larger ending stocks.


Beginning corn stocks are up 77 million bushels.


Forecast 2003 corn production is up 263 million bushels from last month and a record crop.


The sorghum crop forecast is 9 million bushels lower than last month.


Projected corn feed and residual use is increased by 75 million bushels but food and industrial use is lowered by 25 million bushels because of reduced demand for high-fructose corn syrup.



Projected ending stocks - 11 million bushels lower than last month as a 45-m illion-bushel increase in production is more than offset by reduced imports and increased feed and residual use.


A 50-million-bushel increase in feed and residual is the result of larger-than-expected feed and residual use in the first quarter of the marketing year implied by September 1 grain stocks.


The projected price range is lowered 10 cents on the top end of the range to $3.10 to $3.50 per bushel because of lower-than-expected prices during the past month.