U.S. grain producers are on track to harvest record corn and soybean crops in 2004, barring any weather problems, according to USDA. This would be good news for livestock companies struggling with higher production costs. Normally, excess grain supplies would push down the price of feed. However, stronger export markets and alternative uses for corn, particularly ethanol production may mute or completely eras any grain supply benefits on feed prices.
New varieties, adequate soil moisture in most parts of the country, and new crop growing technologies have boosted per-acre yield and overall production projections for both crops. USDA expects corn production to reach 10.425 billion bushels, up 3 percent from last year’s record crop. Soybean production is expected to total 2.965 billion bushels, up nearly 23 percent from a disappointing 2003 harvest.
Rapid growth in ethanol production is fueling domestic demand and prices for corn, while reduced competition from China is increasing exports. Soybean prices, however, are expected to fall, due to dramatically increased production and ending stocks.
Nationally, corn prices are expected to average $2.75 per bushel in the marketing year that ends Aug. 31, 2005, up 10 percent from 2003/2004, according to USDA. Soybean prices are expected to average $6.35 per bushel, down 17 percent from 2003/2004.