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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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