Prices for Corn, Soybeans May Tumble
Prices for U.S. corn and soybeans will sink to stressful levels under the weight of the second mammoth harvest in a row, the government forecast Wednesday.
The U.S. Department of Agriculture estimated a corn stockpile of 2.22 billion bushels at the end of this marketing year, the largest corn surplus in 18 years. At 260 million bushels, the soybean carry-over would be the largest in six years.
On the heels of records set last year, the USDA pegged the corn crop at 10.86 billion bushels, soybeans at 2.97 billion bushels and cotton at 22.72 million bales -- each representing the second-largest U.S. crop of its type on record.
Corn was up 2% and soybeans up 4% because of yields that were higher than expected a month ago.
“These corn and soybean numbers just nail down ... moderate to low prices,” said private consultant John Schnittker. “It gives a certain amount of comfort to the food industry, but not much comfort to farmers or the government.”
Low prices mean larger crop subsidy costs for the USDA. Its estimate of a season-average corn price of $1.85 a bushel is 5 cents below the minimum price guaranteed to growers. This month, one farmer said the country elevator price for corn in central Illinois was $1.37 a bushel.
Soybeans will fetch an average $5.40 a bushel and wheat, $3.40, the USDA said. In both cases, that is above the support price but still low enough to potentially trigger USDA payments to lift returns to the target level set by Congress.
The prices forecast by the USDA were similar to low prices at the start of this decade. In fiscal 2000, crop subsidy payments hit $27 billion. This year, the payments are estimated at about $18 billion, up $2 billion from last year.
In a review of the fall harvest, the USDA said “the drastic loss” of trees to the citrus canker would limit the Florida orange crop to a small 190 million boxes.
Hurricane damage reduced Louisiana sugar output by 104,000 tons to 1.15 million tons, or 16% less than forecast before Hurricane Katrina hit Aug. 29. Florida sugar output edged up.
