Grain Crop Outlook for 2004 Depends on Global Supply and Consumption

“Agricultural economists have been saying for two or three years that we're in a precarious supply and demand balance on a global scale.” Steve Riggins, UK grain marketing specialist

By Haven Miller LOUISVILLE, Ky. (Dec. 17, 2003) – This year’s U.S. corn harvest is the highest on record while smaller U.S. soybean yields are bringing surprisingly good prices. Whether these trends continue in 2004 depends on growing conditions and world supply and demand. Speaking recently at the Kentucky Farm Bureau Federation’s annual meeting in Louisville, University of Kentucky grain marketing specialist Steve Riggins said world consumption has been exceeding world production for several years, and that means an uncertain market for grain crops. “It’s gotten to be a tighter and tighter situation, and I’m a little surprised media hasn’t picked up on this more because agricultural economists have been saying for two or three years that we’re in a precarious supply and demand balance on a global scale,” he said. Kentucky corn farmers saw yields of 140 bushels per acre in 2003, just two bushels per acre below the state record set in 2001. Market analysts project use of U.S.-produced corn could exceed 10 billion bushels, which would be a record high. According to Riggins, U.S. corn exports are up this year over 2002 when an unusually large wheat crop in former Soviet countries likely replaced U.S. corn sales on the world market.  Kentucky’s soybean crop fared better at a record 43 bushels per acre than the U.S. crop as a whole.  U.S. soybean exports will be down for the second year in a row.  Although the U.S. soybean yield was down more than 15 percent this year, global supplies are large. “So we might wonder how you can justify $8 soybeans when you’re looking at the largest soybean crop in the history of the planet,” Riggins said.  “But we are exporting soybeans at a much higher pace than can be sustained, so therefore the price is justified.” U.S. wheat yields have improved compared to 2002, which was the smallest crop since 1972.  Tight world wheat stocks and improved U.S. wheat exports are helping hold prices at historically high levels. “We could have $5 and $6 wheat between now and harvest, and although I don’t think we will, it’s certainly possible,” said Riggins. “We also should keep in mind that five out of the last six years world wheat consumption has exceeded production, and if China starts buying wheat the market could explode.” He urged grain producers to not lose sight of what they’ve learned during their lifetime about sound marketing principles because of market events in 2003. Source: Steve Riggins, 859-257-7256 Return to Main News page.