The corn price outlook is slightly better than in previous years, but nothing to get excited about, according to a crop economist at the University of Missouri’s quarterly outlook teleconferences. Prices in recent weeks have held between $1.90 and $2.10/bu.
"If there is no weather scare, $2 corn will likely be the norm for 2002,"
ssays Gary Adams, of the MU Food and Agricultural Policy Research Institute
(FAPRI). There is even less optimism in the soybean market, Adams says.
(After harvest, beans have been trending under $4.20 per bushel as supplies increased.
"Prices are below those of a year ago, and there are a lot of soybeans in the United States, and potentially in Brazil and Argentina as well," Adams says. The
U.S. had a record-setting bean crop last year.
"The markets are currently paying a lot of attention to growing conditions
in South America," Adams adds. "Recent dry weather raises some concern, but
at this stage, it's too early to say that any damage has occurred. With good
weather, we will see large crops as acreage has increased."
Corn prices have recovered recently from harvest-time weakness, Adams says.
Corn stocks are down because of less harvested acreage and lower yields in 2001. Export markets, however, have been sluggish.
The outlook information was given in telephone conference calls to meetings in University Outreach and Extension centers across the state. The outlooks are given quarterly.
One bright spot in the outlook is ethanol production. Corn going into fuel set record levels in October and November. "That is likely to continue strong," Adams says.
The main concern is slow corn exports. Early in the marketing year, the USDA projected two billion bushels of corn for export. However, by mid-December, only 775 million bushels had been shipped overseas.
"It will be a real challenge in the second half of the marketing year to reach that goal," Adams says. "A lot will depend on China, which was expected to be buying corn. But so far, there have been few shipments."
Mexico, a major buyer, is having an economic slow down, just like the United States, and has slowed its purchases. In the soybean market, better crushing margins for processors gives strength to the outlook. While soy meal prices have been lower, the soy oil price has been trading higher.
"The USDA has projected a 2% increase in soybean crush," Adams says.
"That will use more of the soybean supply."
Exports have done well in the first half of the marketing year, but that is
not expected to continue, Adams said. "If Brazil and Argentina come in with
big crops, it will slow our export pace."
A wild card in all markets is the political and economic instability in
Argentina, Adams said. Their peso has been devalued, in relation to the
dollar, by 30 percent. That has led to continued upsets in the leadership.
"It is difficult to do business in such turmoil," Adams said.
Until their currency situation becomes a bit more settled, Argentine
farmers might not rush to sell their crop. "They may hold grain, waiting for
a more stable currency," Adams said. "That could be a near-term benefit for
U.S. producers in the world market."
Meanwhile, U.S. producers face their own uncertainty. Adams sees a soybean
season-average price of $4.45 per bushel, if the U.S. has normal crop yield.
The current government loan rate is $5.26 per bushel. However, some versions
of the farm bill before the U.S. Congress would lower that support level.