GRAIN REPORT
By Dr. Robert Wisner

CORN

Look for higher cash corn prices into early to mid May as grain traders turn their attention to planting progress, crop conditions, and weather prospects for the growing season. Much of the Corn Belt east of the Mississippi is going into the spring with unusually wet soils. The risk of planting delays in that region could cause grain traders to worry about below-trend yields and tighter supplies next season. That concern, however, will be tempered by expectations that farmers will shift some soybean acres into corn.

From June onward, cash and new-crop corn prices have a strong seasonal tendency to decline irregularly into early fall. Keep down-side risk in mind as you fine-tune your marketing plans for farm-stored corn. Also, check forward contracting prices for July to August delivery. At press time, contracts for mid to late summer offered modest storage profits for well-managed on-farm storage. But prices were not high enough to cover typical elevator storage charges. If you haven’t cashed out your LDPs and plan to hold corn into late summer, take advantage of marketing loans for low interest rates and price protection.

Lagging corn export sales and large supplies have pressured corn prices for several months. Cumulative shipments to date and outstanding unshipped export sales at press time were 11 percent below a year earlier. If that rate of decline should continue through summer, Aug. 31, 2005 U.S. corn carryover stocks probably would be about 2.2 to 2.3 billion bushels. That’s a 10 to 11-week supply. By harvest time, it would create the potential for even larger shortages of storage space than last fall. To meet recent USDA projections, weekly sales for the next several weeks should be in the 1.0 to 1.1 million ton range. Failure to reach these levels would increase the down-side risk for late-summer prices.

BEANS

Look for increased volatility in prices in the next few weeks as farmer marketings decline and grain traders focus on the risk of Asian rust. With a record South American crop being harvested, up-side price potential looks limited for the next several weeks, but modest short-term price strength is possible. Significant strength later in the summer probably would require evidence of serious U.S. rust infections.

Export demand so far has been about as expected. The bright spot is Chinese purchases, which at press time were 18 percent above a year earlier. The EU also increased its U.S. soybean purchases after a sharp cut last season. Gains in these two markets helped offset sharp declines in sales to other destinations. The real test, however, will come in the next several months. Last year from late

January through August, China bought almost no old-crop U.S. soybeans. China recently worked out an agreement with Brazil that settles last year’s complaints about chemical residues in soybeans. A Chinese shift to

Brazilian supplies would make our bean market more dependent on other customers which typically make up two-thirds of U.S. soybean exports. With sales in most of those markets already lagging and a record South American crop starting to enter world markets, spring and summer U.S. export sales may be disappointing.

Domestic soybean crushings have been supported by good profits for livestock and poultry producers. But export demand and Asian rust almost certainly will be the main factors driving prices. With added costs of spraying for rust, farmers probably will plant fewer double cropped soybeans in the mid-South and southern parts of the eastern Corn Belt than normal. Four to 4.5 million acres usually are double cropped, producing 125 million bushels. That’s about 4 percent of a normal U.S. crop.

WHEAT

Significant strength in hard and soft wheat prices probably would have to come from unexpected deterioration of U.S. crop conditions. Soft red wheat appears to have more potential than hard wheat for short-term rallies led by crop and weather concerns. U.S. soft wheat planted acreage is estimated to be 19 percent below a year ago, in contrast to only a 1 percent decline in plantings of hard red winter wheat. Missouri wheat acreage is estimated to be 33 percent less than a year earlier, along with declines of 64 percent in Arkansas, 29 percent in Illinois, 20 percent in Indiana, 11 percent in Iowa and 9 percent in Ohio. Wet fields prevented planting of wheat last fall in these and other soft wheat states. Soft wheat yield potential at press time also was being threatened by excessive soil moisture. While hard winter wheat had periods of cold without snow cover this winter, damage so far is believed to be minor. Soil moisture reserves in the hard winter wheat region look much better than last year.

Export demand for soft red wheat, while not great, is holding up better than for hard red winter wheat. As we went to press, cumulative soft wheat export sales were down 17 percent from a year earlier. That compares with a 28 percent decline for hard red winter wheat. Exports of both classes have been reduced by better foreign crops. Soft red exports are being helped by slightly increased sales to China, with about 20 percent of our exports being shipped to the Chinese. No U.S. hard winter wheat has been sold to China at this writing and none was sold to them last year. Hard red winter wheat is the only class of U.S. wheat sold to Iraq so far, and more sales may be coming this summer. However, Europe and Australia will be competing in that market.

 Recent reports indicate the Ukraine wheat crop has been more at risk of winter-kill damage than last year.