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July 10, 2003

Economist: State's 2003 crop no bin-buster, but better than '02

WEST LAFAYETTE, Ind. – Indiana row crop farmers aren't likely to set any production records this year, but given the struggles many experienced during spring planting, they still could harvest a much larger crop than one year ago, said Chris Hurt, a Purdue University agricultural economist.

Hurt calculates state corn growers are on track to produce 760 million bushels, at a somewhat below average yield of 137 bushels per acre. Soybean production trends point to a 240 million bushel crop, at an average per-acre yield of 45 bushels.

Hurt's production estimates are based on planted acreage projections and crop condition updates issued by the Indiana Agricultural Statistics Service (IASS). The IASS estimated 2003 Indiana crop plantings at 5.7 million acres for corn and 5.4 million acres for soybeans. The projections represent a 6 percent increase in corn acres from 2002, while soybean acres are 7 percent below the previous year's levels.

Crop conditions currently are below average, brought on by the combination of adverse planting weather and recent flooding in portions of Indiana. Poor conditions increase the potential for lower crop yields. Favorable weather the remainder of the summer could move yield potential higher, however.

"While we have had our problems again this year, production prospects are still much better than last year's drought-reduced crops," Hurt said. "With expanded corn acres and much higher yields than last year, corn production in Indiana could rise more than 20 percent. That would come from 6 percent higher corn acreage and 13 percent higher yield.

"On soybeans, the big impact is the smaller acreage that we have this year. Still, we're looking at yields up about 10 percent. That would mean total production would be up around 2 percent. Not a lot of change, but an improvement on yields, which is very beneficial to farm incomes."

For a second straight spring, Hoosier farmers contended with excess rain. The abundant moisture forced many growers in southern Indiana to push back planting dates or replant flooded acres. It is unclear how many acres were left unplanted because of soggy conditions or will be abandoned because of recent floods.

Adjustments in crop acreage figures are likely, since many southern Indiana farmers intending to plant corn might have planted soybeans instead, Hurt said.

Although yield potential is somewhat below average for Indiana, corn and soybean crops in other farm states are in better shape, Hurt said.

"Right now markets are focused more on the national crop than the Indiana crop, in terms of price patterns," he said. "What we see is the Indiana crop being among the one-third poorest crops that we've had in recent history, while the national crop on both corn and soybeans is among the top one-third of the crops. We're looking at national yields being above trend – corn probably in the 142-143 bushel per acre range.

"What that suggests is we're going to build carryovers of corn, that we will see prices lower as we move into the fall, and that cash prices here in Indiana might range from $1.85 a bushel to, perhaps, $2 a bushel on the Ohio River markets."

Cash corn prices currently hover around $2.30 a bushel.

Soybean prices also likely will dip as harvest approaches, Hurt predicted.

"Current prices on old-crop soybeans are still in the very high $5 range, but there's a transition coming – something in the range of $1 a bushel lower," he said.

Farmers with 2002 crop soybeans and corn have some decisions to make in the near term, Hurt said.

"Old-crop soybeans should be moved pretty aggressively at this point because we are looking at a very big drop in price sometime between now and harvesttime," he said. "We think producers also should be cautious about locking in harvesttime prices if they have beans that might be harvested early, because we do have this inverse between the old crop and the new crop.

"Currently, there are some new-crop corn pricing opportunities that we think will be somewhat better than at harvesttime, although at this point we're essentially at the loan level or around the loan level. If prices do move lower, then producers will be able to sell their crop at harvest and get loan deficiency payments that will bring them up to at least the loan."

A year ago, Indiana farmers planted 5.8 million acres of soybeans and 5.4 million acres of corn – the only time soybean acreage topped corn. The 2002 crop produced 631.6 million bushels of corn and 235.7 million bushels of soybeans. Average yields per acre were 121 bushels for corn and 41 bushels for soybeans.

Writer: Steve Leer, (765) 494-8415, sleer@purdue.edu

Source: Chris Hurt, (765) 494-4273, hurtc@purdue.edu

Ag Communications: (765) 494-2722; Beth Forbes, bforbes@aes.purdue.edu; http://www.agriculture.purdue.edu/AgComm/public/agnews/

Related Web site:
Purdue University Department of Agricultural Economics


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