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Grain Supply Update: May 12
Grain Supply Update: May 12, 1997
Corn Bread Sounds Good!
Copyright (c) 1997 by Geri Guidetti
It has been a while since I’ve made cornbread, and I think it might be a
good time to do it. The stored corn meal needs to be used up--oldest
first--and replaced with good, fresh meal at the end of this summer, and
it looks like a good year to stock up. During the years 1992-96, the
average percentage of the current season’s corn crop planted by May 11th
was 50 percent. As of yesterday, a full 71 percent had been planted, a
good start indeed.
The Department of Agriculture released its earliest assessment of U.S.
and world crop supplies for the 1997/98 season this week. Keep in mind
that their projections are very tentative because there are so many
unpredictable variables, weather being the biggest and economics running
a close second. They predict that corn supplies will be up 11 percent
this year and total corn use will increase 7 percent. If it
materializes, it would leave a nice cushion which would increase our
ending stocks by 440 million bushels, an improvement in the carry-over
picture of recent years.
Globally, demand for corn is soaring as China and other industrializing
countries increase their demand for corn-fed meat. Overall, foreign
corn production is expected to decline this year, but larger stocks from
last season are expected to offset the loss, and U.S. exports of corn
this year are expected to prevent a short-fall. Let’s hope our good
start in corn is sustained throughout the season.
Wheat continues to look like a problem. The remainder of the winter
wheat crop that has been hard-hit by a late spring freeze in the Plain
states is now heading. The average percent headed by May 11th from
1992-96 was 38 percent. As of yesterday, 34 percent was headed. Winter
wheat crop condition was estimated at 53 percent in good to excellent
condition and 47 percent fair to very poor. This is a slight
improvement over last week’s estimates. Today’s Wall Street Journal,
however, reports that the Wheat Quality Council just toured Kansas hard
winter wheat fields and estimated average production at 336.2 million
bushels. This is far below expectations, so I suspect USDA figures on
winter wheat will be revised downward by next week if not sooner.
Spring wheat, on the other hand, is not looking good at all as expected
after the devastating floods in the Dakotas and Minnesota. Only 33
percent of this season’s intended plantings are in the ground compared
to an average 56 percent by this date. How much of that planting has
emerged tells an even more compelling story. Only 6 percent is up and
growing compared to an average 25 percent for the years 1992-96. The
official USDA projection for the total U.S. wheat crop for 1997/98 is
"for a smaller crop, lower use, an increase in ending stocks and lower
prices." The smaller crop is a near certainty. Lower use? Increased
ending stocks (based on U.S. production) and lower prices? These are
far less certain—even unlikely.
Foreign wheat imports are unlikely to be available to fill the gap.
John Kleist, agricultural research director for ING Futures and Options
Inc.in Chicago told Investor’s Business Daily that Australian and
Argentine wheat crops have been sold out , "due to troubles with U.S.
crops." Kleist thinks wheat can get expensive again, saying that he
expects a "high-priced , but not record-breaking period..." in wheat
prices according to the article. This is opposite the projections of
the Agriculture Department.
The USDA also predicts that global wheat production AND consumption will
be down from a year ago, and that there will be higher ending stocks.
Optimistic? I think so. I suspect they are looking at the expected
increased corn harvest to take some of the pressure off wheat as feed
grain, and predict that "Much of the projected rise in global stocks is
in the United States, China and Eastern Europe." The global grain
situation is too tight and too unpredictable to get complacent about
potential short-falls. Expecting lowered consumption given the double
whammy of increasing global population at the same time China and
Eastern Europe are increasing their consumption of grains makes
declining consumption highly unlikely.
U.S. rice production is also expected to decline, largely due to late
plantings in Texas. In the 5 states that grow 97 percent of U.S. rice,
41 percent of plantings have emerged compared to 49 percent average.
Concurrently, domestic use is up while imports are predicted t hit a
record 12.5 million hundredweight. Ending stocks of rice are projected
to drop 11 percent from their 1996/97 levels. We are very dependent on
foreign sources for our domestic rice consumption.
In the 6 states that produce 82 percent of U.S. oats, only 12 percent of
this season’s crop has emerged, compared to the average 29 percent by
this date in 1992-96.
Peanuts plantings continue to lag as well. Only 37 percent of the crop
is in the ground compared to the average 45 percent.
Increasingly, Nature is challenging us in our efforts to sufficiently
feed our growing numbers. Natural limits are palpable. The global
grain cushion is no longer plump. But then, there’s always the grocery
store, right? And then there’s always that corn bread........Geri
Guidetti, The Ark Institute
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