Purdue News

Purdue ag economist a bit bearish on soybeans

"In recent weeks, the market has realized that domestic soybean use was continuing at a rate that could not be sustained for the rest of the spring and summer without running out of beans," said agricultural economist Chris Hurt of Purdue University. "While the USDA did increase the expected use for the marketing year by 5 million bushels, it also provided increased imports of 5 million bushels. In essence, the USDA is suggesting that the continued high rate of soybean use in the United States may be met by imported beans from South America."

Hurt points out, however, that estimates of the South American crop have been cut by about 50 million bushels, which he said makes Monday's report only slightly bearish overall.

The USDA also issued its first estimate of production and use for the 1997 crop, which Hurt said also sounds a bearish -- or unfavorable -- tone.

"With the large increase in planted acres this spring, a projected crop of 2.6 billion bushels would establish a new record, passing the 2.5 billion bushels of 1994," he said. "Carryover stocks are expected to increase to a comfortable 260 million bushels from the tight 125 million of this year."

Hurt said the USDA expects prices for new-crop beans to be sharply lower for the 1997 crop, with the average U.S. price ranging from $5.50 to $7 per bushel.

"The wide range reflects the uncertainty associated with making the forecast before much is known about the size of the 1997 harvest," he said.

CORN

The USDA estimates that the 1997 corn crop will reach 9.8 billion bushels, second only to 1994's 10.1-billion-bushel crop. Talk of another corn crop of this size will tend to depress both old- and new-crop corn prices, Hurt said.

The corn harvest is projected at 75.1 million acres, with an approximate yield of 131 bushels per acre. Usage is predicted to reach record highs of 9.4 billion bushels, slightly exceeding the 1994 level. Carryover stocks were bumped up to 1.3 billion bushels, with estimates of prices at harvest dropping to about $2.25 per bushel.

"One has to question whether the USDA has overestimated the yield potential for this crop," Hurt said. "My own yield estimates are closer to 126 bushels per acre, based upon trends since the early 1980s, with a crop of 9.5 billion bushels.

"The USDA has increased its yield estimate due to the early plantings this spring. While the crop is in the ground early, it is not growing or emerging early due to the cool weather; and the forecast remains cool and wet into the third week of May. Also, in the last 16 years, the USDA has overestimated the size of the corn crop in May in almost two-thirds of the years."

WHEAT

The USDA predicts the 1997 wheat crop will be as big as last year's, even though 6.4 million fewer wheat acres were planted. However, fewer acres are expected to be abandoned, Hurt said.

Indiana yields are expected to average 55 bushels per acre, up sharply from last year's counts in the high 30s.

Nationally, a 2.3-billion-bushel crop is expected, and use is expected to drop. Hurt said slight increases in domestic milling and exports are expected to be offset by lower feed use. Feed use is expected to drop because of better wheat quality, larger corn supplies and lower prices. Hurt said average farm prices will range from $3.60 to $4.20 per bushel, down sharply from the $4.35 U.S. average price of the 1996 crop.

Source: Chris Hurt, (765) 494-4273; e-mail, chris_hurt@acn.purdue.edu
Writer: Amy H. Raley, (765) 494-6682; e-mail, ahr@aes.purdue.edu
Purdue News Service: (765) 494-2096; e-mail, purduenews@purdue.edu

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