Writer: Edith A. Chenault, (979) 845-2886, e-chenault1@tamu.edu
Contact: Dr. Mark Waller, (979) 845-8011
COLLEGE STATION — Recent crop estimates for corn and grain sorghum are shedding a little encouraging light for those producers in the middle of the 1996 drought. Released by the U.S. Department of Agriculture, the estimates show that supplies will be up from estimates earlier in the year.
“The numbers (from the report) reflected what the industry had anticipated,” Dr. Mark Waller, agricultural economist with the Texas Agricultural Extension Service, said.
Warmer weather and better growing conditions across the Midwest contributed to the higher-than-expected corn yields, he said.
The 1996 feed corn crop in the United States was estimated at a little over 8.8 billion bushels. In last month’s estimate, it was 8.7 billion bushels. In Texas, production is estimated at 171 million bushels for 1996; last year, state producers grew 216.6 million bushels.
“It’s still a relatively short crop compared to our potential,” he said, “but you’ve got to remember that last year’s crop (in the United States) was down about 27 percent from the previous year.”
Estimated yields for grain sorghum are up about 30 million bushels at 764 million bushels nationwide. Good rainfall and growing conditions in the Texas Panhandle, Nebraska, Kansas and some parts of Oklahoma have boosted those numbers, he said. Last year, the crop was 460 million bushels.
In Texas, yields for grain sorghum are 1.7 million bushels, up more than 500,000 bushels, over last year. These good yields are mostly from the northern part of the state — southern producers were hard hit by the drought.
Even with these higher numbers, the United States will still have fairly tight grain supplies. “Prices are still going to have the potential to be very volatile as we move through the marketing year,” he said.
“However, unless there’s some kind of surprise over the next couple of months like an early freeze in the Midwest that could still really damage some of the corn crop, it’s unlikely that we’ll see the kind of high prices that we saw earlier in the summer.” Prices were at record levels of $5 per bushel; now, futures prices are from $3.25 to $3.50 per bushel level, he said.
While these higher prices may be good news for some people, it is not for others.
“In Texas, it would be better to have better yields statewide so we could capture some of the prices,” Waller said.
Additionally, these are still historically high prices. “For a feed grain producer who saw $5 corn last spring and in the early summer, $3 doesn’t look as good any more. For the guy who’s going to be feeding that corn, whether it’s to cattle, hogs or chickens, and who has been paying $2 to $2.50 per bushel, that’s still too high for him to make good returns,” Waller said.
Consumers may see an upward creep in their food prices, but very little, he predicted. The actual farm level value of grain items like bread or corn chips is really only about 5 percent to 7 percent of the price, he explained.
These crop and supply and demand estimates are released monthly by the USDA.
“The federal government is really the only entity that tries to go out and do scientifically based yield surveys. That’s of importance to everyone in the marketplace because without it they really don’t know what’s out there.”
Additionally, the supply and demand estimates give current information what prices might be over the coming year and what is happening in other countries.
“It gives people in this country a better idea of how things are going on in Thailand or China and how that might impact our markets here,” he said.
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