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January 29, 2003

Economist predicts more corn, fewer soybean acres in 2003

WEST LAFAYETTE, Ind. – Farmers putting their ears to the ground today could be harvesting more ears of grain from it later this year.

Producers are expected to shift their focus back to corn and away from soybeans when planting begins in a few months, said Chris Hurt, Purdue University agricultural economist. Farmers also committed more acres to wheat this past fall – a crop that for decades had been vanishing from the farm landscape.

Despite a recent U.S. Department of Agriculture report indicating U.S. grain stocks are not as tight as previously thought, market conditions are ripe for a return to corn and wheat. Whether the weather provides additional impetus for crop shifts in 2003 remains to be seen, Hurt said.

"I think we're going to see lower acreage on soybeans this year, and some of that is going to move over to the corn column," Hurt said. "We're going to see about a 1.5 million to 2 million acre increase in corn nationally. Beans will probably drop somewhere in the range of 4 percent in acreage for this coming year.

"With normal weather, corn production should approach 10.1 billion bushels – that's about our usage for this next year. Currently, USDA is estimating that the 2002 crop will average about $2.40 a bushel. As we go through this winter I think we'll see a better pace on corn exports."

Any weather uncertainty could provide modest price support, Hurt said. "However, large price rallies should not be anticipated, with spring and summer weather the next big focus for potential price impact."

U.S. corn production was 9 billion bushels in 2002, down 5 percent from 2001. Although planted acres rose 4 percent to 79.1 million acres, yields fell 6 percent. Meanwhile, U.S. soybean production dropped about 5 percent, to 2.73 billion bushels. Farmers planted 73.8 million acres of soybeans in 2002.

Last year Indiana farmers planted more acres of soybeans than corn for the first time in history. Soybean acreage reached 5.8 million acres – 400,000 acres more than corn. State corn production was 631.6 million bushels, down 29 percent from 2001, while soybean production was 235.8 million bushels, a 14 percent drop from the previous year.

Planting decisions and crop yields in Indiana and other Eastern Corn Belt states were altered dramatically by nearly constant rain during the critical planting months of April and May. Because corn's ideal planting period falls earlier than soybeans, many Hoosier farmers either switched to soybeans or abandoned their fields altogether. As a result, Indiana farmers shifted 600,000 acres from corn to soybeans.

This coming spring could prove different. Long-range weather forecasts call for a warm and dry spring. Such a weather pattern could motivate farmers to plant early, favoring additional corn acres, Hurt said. A wild card is an ongoing drought in the Western Corn Belt – a drought that is slowly moving east.

"We've still got a lot of the drought left over from 2002," Hurt said. "It has never truly abated in the Great Plains, and we're now seeing northern Illinois, most of Iowa and Missouri, and even northern Indiana, added to the dry weather concerns.

"This tends to suggest that subsoil moisture may not be replenished going into the spring. So maybe in Indiana we'll have the opposite of last year and get a huge amount of corn planted in April, and wrap it up by the middle of May."

Currently, Hurt estimates the average price at harvest for 2003 crop corn at nearly $2 a bushel.

U.S. soybean acres could drop sharply if production in competing nations is as high as expected, Hurt said.

"The soybean situation depends on South America," he said. "If that crop comes in normal, I think we stand some reasonable chance of seeing lower prices to the tune of 20 cents to 30 cents going into March and April, and then a market that struggles somewhat on into the spring."

However, "the pace of exports remains quite good," Hurt said. "China is a big buyer of soybeans. And any kind of weather concern in South America could well cause us to move to higher prices on beans and establish new highs for beans this year. But time is running out for growing problems there."

Hurt projects average soybean prices of $5.50 per bushel in Indiana for 2002 crop and near $5 per bushel at harvest for 2003 crop.

Winter wheat planting rose 6 percent nationally and 29 percent in Indiana this past fall when world wheat crops suffered weather-related problems. Indiana farmers seeded 450,000 acres to wheat, up from a state record-low 350,000 acres the previous year.

A return to normal world wheat yields in 2003 likely will lead to declining prices, Hurt said.

Additional spring planting information is available on Purdue's Farming 2003 Web site.

Writer: Steve Leer, (765) 494-8415, sleer@purdue.edu

Source: Chris Hurt, (765) 494-4273, hurtc@purdue.edu

Ag Communications: (765) 494-2722; Beth Forbes, bforbes@aes.purdue.edu; http://www.agriculture.purdue.edu/AgComm/public/agnews/

Related Web site:
Purdue University Department of Agricultural Economics


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