US farmers will reap a lacklustre 1.53 billion bushels of winter wheat this year, and prospects of a record soyabean crop in South America will drag down market prices, the government said on Thursday.
A South American crop of 113 million tonnes, or 4.15 billion bushels, would come on the heels of this spring's downturn in Chinese demand for soyabeans, rebuilding the world's stockpile of the versatile oilseed used as a food ingredient and in livestock rations.
Smaller-than-expected crops in Brazil and Argentina pushed soyabean prices above $10 a bushel in Chicago earlier this year. With a rebound in sight, this year's US crop would fetch a farm-gate average of $6.20 a bushel, the Agriculture Department projected, 15 cents less than the lofty prices for 2003's crop.
Futures prices fell at the trend-setting Chicago Board of Trade. Soyabeans for delivery in November, when the US harvest would be in full swing, sold for $6.63 a bushel, down 16 cents, when trading opened. Shortly after trading opened, July corn was $2.90 a bushel, down 7-1/2 cents, and July wheat was $3.55, down 5 cents.
Drought and harsh weather will limit the winter wheat crop to 1.53 billion bushels (41.7 million tonnes), USDA said, down 19.6 million bushels - 1 percent - from its May estimate and 10 percent smaller than in 2003.
Based on June 1 conditions, the estimate for Kansas, the leading state, was down 18 million bushels, to 351 million bushels, and Nebraska was down 7.4 million bushels, to 64.75 million bushels, due to drought, heat and frost.
Yields improved in Montana, Washington state and Oklahoma, helping offset a 3 percent slump in hard red winter wheat. Heavy rain fell in May in the three major states growing soft red winter wheat - Illinois, Missouri and Ohio.
The wheat crop world-wide looked good. A record crop of 128 million tonnes was forecast in the European Union. China and Russia also were up.
USDA projected a record US soyabean crop of 2.965 billion bushels, or 80.7 million tonnes, this year, along with a record 66 million tonnes in Brazil and 39 million tonnes in Argentina. Brazil's latest crop was 52.6 million tonnes, cut by disease and bad weather, and Argentina reaped 34 million tonnes.
With China trimming its imports this season, the world will have more soyabeans on hand. The larger stockpile is expected to provide increased export competition for US soyabeans, USDA said, lowering its forecast for exports in 2004/05 by 15 million bushels, to 1.065 billion bushels.
Private consultant John Schnittker said a vast increase in soyabean output "could be a very sobering factor" in soyabean prices. But, "we still have to realise it," he said, with harvest months away.
Production of feed (coarse) grains will surge world-wide, USDA projected, including a record US corn crop. But the world stockpile would continue to shrink, mainly due to China again consuming far more than it grows and imports.
"That is going to be a big thing," Schnittker said, China "is using up her own stocks. She can't keep pulling them down, year after year."