Summer 2003, Vol. 9 No. 3
In this issue...
Iowa's Agricultural Situation: Crop projections increase, national hog inventory declines
Crop projections increase, national hog inventory declines
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Current weather forecasts and crop condition reports indicate that bumper crops likely will fill the bins this fall. The July U.S. Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates report raised its estimates of 2003-04 U.S. corn production by 210 million bushels from last month's projections, to 10.27 billion bushels, as current crop conditions and forecasts indicate higher prospective yields than the trend yields used in the previous estimates. USDA also raised the projected U.S. soybean production to 2.89 billion bushels, up 30 million bushels from June's estimates.
Contrary to earlier trade expectations that some producers would shift from corn to soybeans, or that the acreages of both crops would fall because of adverse weather early in the planting season, the June USDA Acreage report raised acreage projections for both crops. Farmers increased corn and soybean plantings by 44,000 and 471,000 acres, respectively, from their March intentions. No anticipated loss of acres or abandonment materialized, and farmers in the eastern Corn Belt increased corn plantings to compensate for last year's poor crop.
While 79 million acres planted to corn is similar to last year's level, USDA raised the projections of acres harvested for grain to 72 million acres, up 4 percent from 2002. In spite of the timely corn planting and favorable weather conditions in early April, subsequent cold temperatures and precipitation kept the planting pace slightly behind normal, with 95 percent of corn plantings completed by June 1. As of June 22, 73 percent of the U.S. crop was rated good to excellent, up 11 percentage points from this time last year, and up 5 percent from three weeks earlier as warmer, drier weather allowed conditions to improve.
USDA estimates the 2003 soybean planted area at 73.7 million acres, slightly less than last year and possibly the lowest planted area since 1998. The survey indicates that 72.7 million acres will be harvested, up 1 percent from 2002. Soybean planting proceeded somewhat behind schedule, with 94 percent of the crop planted by June 23, which is 2 percent below normal. The share of soybean crop rated good to excellent in 18 major soybean-growing states was stable and remained at 70 percent at the beginning of July.
In Iowa, as of June 14, corn acreage accounted for 12.4 million acres, up 1 percent from last year. Soybean plantings of 10.4 million acres are similar to a year ago. Estimates of corn planted to genetically modified varieties are at 45 percent of the state crop, 2 percent less than intended in March but 5 percent above the national level. Iowa producers planted 84 percent of Iowa's soybean acreage to herbicide resistant varieties, 2 percent higher than March intentions, and 3 percent above the national share. Despite some stormy weather, overall excellent weather conditions in early July spurred crop growth. At the beginning of July, topsoil moisture was rated 3 percent very short, 13 percent short, 73 percent adequate, and 11 percent surplus. Subsoil moisture had similar ratings across the state. At that time, 82 percent of Iowa corn and 80 percent of soybeans were in good to excellent condition.
On the demand side, lower carry-over stocks and increased ethanol usage offset most of the projected corn production gain of 30 to 36 percent over last year. According to the June USDA Grain Stocks report, national corn stocks in all positions totaled 2.98 billion bushels, down 17 percent from last year's levels. The spring corn utilization was 2.15 billion bushels, 5 million bushels below the 2002 level. Despite reduced stocks, smaller crops in Russia and Ukraine, and strong corn demand for both exports and domestic use, analysts agree that a dry weather outlook is needed to push corn prices considerably above loan rate levels at harvest. On the news of excellent growing conditions, September corn futures dropped to $2.15 per bushel on July 10, a decline of 10.25¢ over the week.
Dampening of soybean prices followed an unexpected increase in quarterly soybean stocks, increased acreage, and favorable weather conditions. However, continuing strong export demand enhanced by a weaker dollar balanced the downturn. According to official estimates, soybean storage totaled 602 million bushels, down 12 percent from the 2002 level but above prior trade expectations. Analysts predict that soybeans may rally after the ample South American crop has gone through marketing channels and if the weather deteriorates. In light of the reports, August soybean futures fell 12¢ to close at $6.0275 per bushel on July 10.
According to the June USDA Hogs and Pigs report, the national hog inventory continues to diminish, to a level 2.6 percent below that of last year. The breeding herd declined the fourth time in a row, down 4.3 percent from this time last year. The market herd was 2.4 percent below the 2002 level and, looking at the reduced spring pig crop, is not likely to meet or exceed last year's level until winter. However, looking at fall farrowing intentions coupled with the higher productivity indicated in the report, analysts warn that spring marketing numbers in 2004 may surpass those for 2003.
In Iowa, there were 15.5 million hogs and pigs, down 1 percent from last year's level. The breeding herd inventory was recorded at over 1 million head, down 8 percent from the level in 2002 but identical to the March 2003 level. The number of market hogs on Iowa farms was unchanged compared to a 2.4 percent decline nationwide. Iowa remains first in the nation in hog production, with North Carolina running a close second. Iowa's share of the nation's breeding herd inventory has declined from 24 percent in 1983 to approximately 17 percent in 2003. So far this summer, hog prices have been 13 percent above last year's lows and are expected to remain at levels profitable for most producers (at or above $40/cwt) until the year's end. ♦