Corpus Christi Caller Times Caller.com - USDA predicts price drops for wheat, corn, soybeans

Marketplace \| Services \| Contact Us \| Community \| Arts & Entertainment \| Local Guides

Tuesday, July 13, 1999

USDA predicts price drops for wheat, corn, soybeans
High yields mean lower prices, and price is expected to drop more, but consumer won't see much benefit
By Philip Brasher
Associated Press

   WASHINGTON - Prices for wheat, corn and other major crops are heading down, according to a government forecast that is certain to increase pressure on Congress to approve another big bailout of the agricultural economy.
   Crops are doing so well that on Monday the Agriculture Department lowered its projected prices for wheat by 15 cents a bushel from a month ago and for corn and soybeans by 5 cents. Soybean prices will be the lowest they've been since the early 1970s.
   "These prices are so low they're confiscatory," said Sen. Kent Conrad, D-N.D., who wants to include $9 billion in farm assistance in a USDA spending bill that is pending in the Senate.
   Wheat prices are now expected to average between $2.45 to $2.95 a bushel this year because of the oversupply. Three years ago, before a worldwide glut of grain drove prices down sharply, wheat was selling for an average of $4.30 a bushel.
   In 1950, wheat sold for $2 a bushel, or $13.67 a bushel in 1998 dollars. A pound of bread cost 14 cents in 1950.
   The slump in commodity prices is expected to have little impact on consumers because raw commodities generally account for only a fraction of the price of food. For example, farmers receive 7 cents of each dollar consumers spend on baked goods and cereal.
   Analysts expect commodity prices to drop further, especially if the weather remains good.
   Asking for aid
   The higher yields won't offset the low prices, said analyst Don Roose, president of U.S. Commodities Inc. Corn prices could drop another 20 cents a bushel as the growing season progresses, he said.
   "The normal seasonal pattern would indicate we would get some more declines. Prices are typically lowest at harvest," said Mike Singer, an economist with the Federal Reserve Bank of Chicago.
   Congress gave farmers $6 billion in emergency aid last year to compensate for low prices and weather-related crop losses. This year, farm groups are asking for at least $8 billion more.
   The agriculture department said Monday it expected farmers this year to harvest 1.7 billion bushels of winter wheat, 4 percent more than was forecast a month ago.
   'An ugly business'
   Farmers are getting a record 47 bushels per acre despite heavy rainfall last month that delayed the harvest in Kansas, the heart of winter wheat production.
   Production is also up in Europe, China and Australia, more than offsetting declines in other wheat-growing countries.
   Good weather in the Midwest led USDA to raise its forecast of corn production to 9.7 billion bushels, up from last month's projection of 9.4 billion bushels.
   The price of corn, which is used primarily for livestock feed, is expected to average between $1.65 and $2.05 this year, down from $2.43 two years ago.
   Soybean prices are expected to be between $3.90 and $4.70 a bushel, down from an average price of $6.47 in 1997.
   "It's an ugly business right now," said Bill Flory, president of the National Association of Wheat Growers. "We are going to survive and we are going to prosper, but it's going to take a while."