US corn and soyabean stockpiles will swell to their largest size in nearly two decades, the government estimated on Thursday, with harvest nearly over for the second-largest corn, soyabean, cotton and rice crops on record.
Gigantic crops will weigh on prices. The US Agriculture Department estimated a farm-gate price of $1.80 a bushel for corn, down 26 cents from last year. Soyabeans will fetch an average $5.35 a bushel, down $2 from two seasons ago.
Despite an eastern Corn Belt drought centered in Illinois, the corn crop will total 11.032 billion bushels (280 million tonnes), 2 percent more than forecast a month ago. Soyabeans will tally 3.043 billion bushels (82.8 million tonnes), up 3 percent, said the USDA.
For both crops, yields per acre were better than expected. "This is just going to continue the low-price, high-government-cost situation," said private consultant John Schnittker.
At the trend-setting Chicago Board of Trade, soyabean futures for January delivery fell by 9 cents a bushel, to $5.79-1/2. December corn sold for $1.94, down 1-1/4 cents a bushel. December wheat was $3.12 a bushel, down 3 cents.
Last year's record crops were the first time corn exceeded 11 billion bushels and soyabeans topped 3 billion bushels.
The USDA forecast 2.319 billion bushels (58.9 million tonnes) of corn (maize) would be in storage when the 2006 crop is ready for harvest, the largest surplus since 1987/88. The corn stockpile is now 99 million bushels bigger than the USDA estimated a month ago.
"Ending stocks are now up in the burdensome level," analyst Don Roose at US Commodities said, referring to the surprisingly large US corn crop despite drought in key areas. "Next year, people are going to be respectful that we can grow a crop, a sizeable crop, under some adverse conditions."
The soyabean stockpile, estimated at 350 million bushels (9.5 million tonnes), would be largest since 1986/87. The USDA raised the figure by 90 million bushels from a month ago.
"Late-planted fields matured under favourable fall conditions," the USDA said in explaining its increase in the US corn crop harvest.
Soyabean yields will set records in Iowa, Minnesota, Nebraska, North Dakota and Louisiana, which prompted the USDA to boost its soyabean harvest forecast.
But soaring grain stockpiles mean American farmers' income will drop, prompting a steep increase in government payments.
Last week, the USDA estimated US growers' income would drop about 11 percent to $71.5 billion from last year's record because of lower prices and higher energy costs. Government payments, meanwhile, are expected to sharply rise to an estimated $22.7 billion in 2005.
IN ITS MONTHLY UPDATE ON CROP OUTPUT AND USAGE, THE USDA ALSO:
-- Raised its cotton production forecast to 23.161 million bales, up 2 percent from October and just shy of the record 23.25 million bales of 2004.
-- Lowered its rice harvest estimate by 2.5 million hundredweight, to 220.7 million hundredweight, or 7.01 million tonnes, but still the second-biggest US crop in history.
Reduced its forecast for sugar production in Florida to 1.580 million short tons, raw value, due to hurricane damage. A month ago, the USDA forecast 1.913 million tons of sugar would be harvested in Florida.