970825 Bumper Harvest Should Limit Food Price Inflation
August 12, 1997
Farmers will harvest a huge, record-setting soybean crop along with their fourth-largest corn crop ever, the government forecast Tuesday -- virtually guaranteeing stable food prices this year.
In its first estimate of the fall havest, the Agriculture Department pegged the soybean yield at 2.7 billion bushels, corn at 9.28 billion bushels, about the same as last year, and wheat at 2.53 billion bushels, up 11 percent from last year.
The cotton crop was estimated at 17.8 million bales, 6 percent less than 1996. Bales weigh 480 pounds each.
"The risk of serious food price inflation is very, very low," private consultant John Schnittker said, despite a dry spell that has cut into the corn crop. More than 5 billion bushels a year are used in meat, dairy and poultry production.
Food prices may rise only 2 percent or 3 percent this year, Schnittker said. The Agriculture Department has forecast food prices to climb 2.8 percent in 1997, based on hefty crops and expansion in meat supplies.
"Stability (in food prices) is definitely there," said Annette Clauson, the Agriculture Department's food price expert. "We don't have any drama to talk about."
Last year, low inventories of wheat and corn helped drive up food prices by 3.3 percent, the largest rise this decade.
This year's expected abundant crops should drive down grain prices and fuel demand for exports. Lower feed grain prices could also lower prices for meat.
Lured by high prices, farmers planted the largest corn and soybean acreage in 15 years. Dry weather in late July briefly threatened to harm crops in the Midwest, but rainfall is expected to bring relief to parched fields this week.
The Agriculture Department's estimate of a 9.28 billion-bushel corn crop was a quarter-billion bushels lower than analysts had expected. The soybean estimate came in slightly higher than anticipated.
Corn futures prices soared on the Chicago Board of Trade Tuesday, rising 12 cents a bushel, the maximum increase allowed in a single trading day. Soybean and wheat prices rallied as well.
Steve Bruce, an analyst with trading house E.D. and F. Man International, said the soybean forecast "is going to be even bigger on the (September) report."
The August crop report is the first each year to be based on field surveys of spring-planted crops, which near maturity around this time of year.
Soybean yields were forecast for 39.3 bushels an acre, up 1.7 bushels per acre from last year. A record winter wheat yield of 44.6 bushels an acre helped boost the overall wheat yield to a record forecast 39.9 bushels an acre.
Good weather boosted the outlook for durum wheat and spring wheat, now being harvested, the Agriculture Department said.
Corn yields were estimated at 125.3 bushels an acre, about 6 bushels an acre lower than projected a month ago.
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