FAVORABLE USDA CROP REPORT
The USDA Grain Supply and Demand Report issued on Monday, Jan. 12, was very bullish and extremely positive on the short-term for corn and soybean markets. Even though corn stocks, or the amount of corn in storage, is higher than a year ago, the projected corn carryover was reduced 163 million bu. from the December carryover estimate. This is due to an estimated slight reduction in supplies and a significant increase in exports and domestic usage from a month earlier. In addition, global corn stocks also remain very tight. The U.S. corn carryover is now projected at 981 million bu., which should provide some strength to the corn market. This is very good news, since the final USDA estimate for 2003 corn production in the U.S., released on January 12, was slightly more than 10.1 billion bu., or 142.2 bu./acre nationwide. However, the January corn production estimates are below grain trade expectations and were reduced 2% from November USDA estimates. The estimated 2003 U.S. corn production is the highest final estimated corn production on record, edging out the previous high of just under 10.1 billion bushels in 1994.
USDA final production estimate for soybeans in 2003 was just slightly more than 2.4 billion bushels or a national average soybean yield of 33.4 bu./acre. The 2003 soybean estimate was 12% lower than the 2002 U.S. soybean production estimate, and was the lowest production estimate since 1996. The estimated final average 2003 soybean yield was the lowest since 1993. Estimates for U.S. and world carryover stocks of soybeans remain very tight, which should provide some strength to the soybean market.
GRAIN MARKETS REACT FAVORABLY
The reaction on the Chicago Board of Trade (CBOT) to the USDA report was immediate and highly favorable on Monday, Jan. 12. Both corn and soybeans were trading up sharply for most trading months. It will be interesting to see what the reaction in the corn and soybean markets are in the coming weeks. There should be some good opportunities for growers to price remaining 2003 corn and soybeans that are in storage and to begin pricing the 2004 corn and soybean crop. Many experts are comparing the current strength in grain prices to the strong post-harvest grain prices following the 1996 crop. As we recall, those prices stayed strong until spring and then dropped off sharply by harvest time the following year. While we do not know what will happen to grain prices in 2004, it is good to look for pricing opportunities to lock-in profit and to reduce marketing risk on the 2004 crop.
BSE or Mad Cow Disease continues to surface in national news stories. The good news is that USDA has now used DNA evidence to confirm that the cow from Washington state that was identified as positive for BSE originated from Alberta, Canada. USDA continues to test other potential animals and herds that could have potentially also been affected by BSE. USDA hopes that this confirmation and the additional safeguards will allow the U.S. beef export markets to re-open, especially to Japan and Mexico, our largest beef export customers. Consumer beef demand in the U.S. has remained quite strong in most areas of the country. Market prices for fed cattle and feeder cattle seem to have stabilized, though the prices are down considerably from the prices in December before the BSE incident.
LEGISLATIVE FARM FORUM
“Water Quality Regulation . . . Impacts on Your Farm Operation” is the theme of the 21st Annual Legislative Farm Forum on Friday, Jan. 30, from 9:15 a.m. to 3 p.m. at the South Central Technical College Conference Center, 1920 Lee Blvd., North Mankato, MN. Forum sponsors include: Minnesota Agri-Women, Minnesota Farm Bureau, Minnesota Rural Futures, South Central Technical College’s Agri-Business Department and Farm Business Management Program, Region Nine Development Commission and the University of Minnesota Extension Service.
Minnesota Commissioner of the Department of Natural Resources, Gene Merriam, is the keynote speaker and will highlight State priorities for water quality. University of Minnesota Soil Scientist, Gyles Randall will also be featured in the morning and will focus on the Sustainability of the Corn and Soybean Rotation in Minnesota. A response panel includes: Minnesota Farm Bureau President, Al Christopherson; Minnesota Agri-Growth Executive Director, Daryn McBeth; Minnesota Farmer’s Union President, Doug Peterson; and Paul Sobocinski with the Land Stewardship Project. In the afternoon, State Legislators from South Central Minnesota will address questions about the forum’s topic and other key issues for the 2004 Legislative Session.
Registration cost for the Forum is $10 per person in advance, and pre-registration is requested by Friday, Jan. 23. Cost is $15 at the event, without pre-registration. To register, or for more information about the forum, contact the Blue Earth County Extension Office by phone at (507)389-8325 or by e-mail at: [email protected].
Editors note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at (507)726-2137 or via e-mail at [email protected].