Bumper Harvest

Fickle Weather Plays With Farmers' Fortunes
By William Claiborne, Washington Post, July 16, 2000

If ever there was a season that demonstrated the fickleness of farming, this is it. In May, Agriculture Secretary Dan Glickman and National Weather Service officials predicted that severe drought could cripple the farm economy in much of the Midwest and Deep South. Glickman warned that the lack of rain could be "catastrophic" to farmers, and Weather Service Director Jack Kelly gloomily observed that the Midwest drought was the worst since 1955. Farmers in the agricultural heartland took heed of the warning. Many who were still storing their 1999 yields held off putting their crops on the market, reckoning that a drought-induced falloff in production this year would drive up prices. What happened was just the opposite. Timely rains and cooler-than predicted temperatures have offered promise of bumper crops in much of the Midwest and other parts of the nation this fall, ensuring that grain and soybean prices will go down for the third straight year because of continuing oversupply, according to farm economists.

The U.S. Agriculture Department last week lowered its price projections for corn, soybeans and wheat because of bountiful crops and sagging markets in the United States and overseas. The USDA said farmers should get an average of $1.70 per bushel for corn this year, 15 cents less than a projection issued last month and 10 cents below what growers got for last year's crop. The projection for soybeans is down 10 cents from June's estimate and 25 cents less than last year's average. The estimate for wheat is $2.50 a bushel, down 15 cents from the June forecast. The forecast for soybeans is the lowest since 1972, and for corn it is the lowest price since the mid-1980s, when farmers rebelled and descended on Washington in tractor motorcades to protest farm policies. Agriculture experts said the already abundant stores of commodities are likely to aggravate the price declines. Keith Collins, the USDA's chief economist, said the turnaround in the weather pattern and the new commodity price estimates were "disturbing" to him because he had had reservations about holding the joint USDA-Weather Service news conference on May 17 and about the Weather Service's first spring drought forecast, which he said was based on new and unproven long-range predicting technology. "I felt there was not necessarily an implication for the size of the crop because timely rain could be opportune and you could have normal crops," Collins said. "But fairly strong signals were sent from the federal government that could have influenced some farmers' marketing decisions."

Huge U.S. Crops Drive up Surpluses, Sour Prices
Reuters, September 12, 2000

The record-large corn and soybean crops being harvested by U.S. farmers will drive up grain surpluses sharply and bring another year of low prices, U.S. Agriculture Department forecast Tuesday. Based on field inspections and interviews with 15,000 growers, USDA estimated the corn crop at a record 10.362 billion bushels and soybeans a record 2.90 billion bushels, both 10 percent larger than last year. Drought whittled the cotton crop to 18.3 million bales, each weighing 480 lbs. Wheat was forecast at 2.3 billion bushels, the same as last year. “We're going to have continuing low prices” persist far into 2001, said private consultant John Schnittker. Greg Doud of the consulting firm World Perspectives said the expanding U.S. stockpiles means “There is just no way out of the box as far as corn is concerned,” which would weigh on soybeans and wheat prices as well.