|By SARA DRYDEN
CHICAGO, Ill. — Commodity experts said this year’s crop conditions leave several unanswered questions making it hard to forecast production levels.
“The fireworks for the year are not over,” said Don Roose, president and CEO of U.S. Commodities, Inc. concerning the latest USDA crop production and supply/demand report released on Aug. 12.
The Chicago Board of Trade conducted a panel analysis following the release of the report. Roose was a guest analyst along with Richard Feltes, vice president and director of research for Refco, Inc.
The report showed soybean and corn yields down from last month and this time last year. Wheat is down from last month but up from last year. USDA’s first survey-based forecast for 2005 corn production is 10.35 billion bushels. Soybean production forecast is 2.791 billion bushels. Wheat is 2.167 billion bushels.
“This report is the greatest value in terms of wheat production. We can gather somewhat for corn and we are limited in soybeans,” said Feltes. “There’s still a lot to be determined.”
Roose added, “World and U.S. numbers continue to shrink.”
This summer’s above normal temperatures and below normal precipitation have taken a toll on this year’s U.S. corn and soybean prospects. According to the U.S. Drought Monitor, much of America is suffering from the dry weather. Central and northwestern Illinois along with parts of Iowa and Missouri are suffering the worst, declaring extreme drought conditions.
“This has been the hottest growing season since 1995,” said Roose. “It is hard to say how much early heat affects a crop.”
The soybean crop is now the one to watch. August is the most important growing month. August rainfall in the central U.S. will be crucial in determining this year’s soybean output.
Global wheat production is down slightly from last month though consumption and trade are nearly unchanged. Even so, Feltes says “there is plenty of wheat in the world. There is no shortage in the U.S. or globally.”
Experts are also concerned about the rising cost of energy. Record high levels of crude oil may affect production next year. According to Feltes, the high cost of energy may cause a demand for corn and ethanol production.
“We are underestimating ethanol use,” said Feltes. “More ethanol plants are opening up.”
Both panel analysts concluded that there are still a lot of questions to answer. Wheat, corn, and soybean crop size can still shrink. It is uncertain yet as to the effect of the hot growing season on this year’s crop outputs.
Published in the August 17, 2005 issue of Farm World.