The country`s supply of wheat will shrink in the coming year to the lowest level since 1974, soybeans will pile up and corn reserves will remain essentially unchanged, according to Agriculture Department`s October crop report released Thursday.
Grain traders were surprised by a separate report that lowered the department`s estimate of 1989-90 Soviet grain imports to 34 million metric tons from 36 million projected last month. The estimate for Soviet grain production also was increased to 205 million metric tons from 200 million estimated in September.
The estimates, if accurate, lessened the prospects for U.S. sales to the Soviet Union, the world`s largest grain importer.
Farmers in the Midwest, blessed with almost perfect weather, are harvesting corn and soybeans at a fast pace. The department, as expected, increased the estimate for production of the nation`s most important crops from last month`s forecast, while lowering the estimates for total wheat production.
U.S. corn production, as of Oct. 1, was forecast at 7.45 billion bushels, up 2 percent from last month and 51 percent ahead of the drought-shortened 1988 crop of 4.92 billion bushels. As a livestock feed, corn is essential for the production of meat, poultry and dairy products.
The soybean harvest also was projected 2 percent higher than September estimates at 1.93 billion bushels, up 24 percent from 1988 production of 1.54 billion. Soybeans are a major source of high-protein meal and vegetable oil.
Wheat production was lowered by 1 percent from last month to 2.04 billion bushels, which is 13 percent more than the 1.81 billion-bushel 1988 crop. However, it was a supply and demand report that raised some eyebrows.
The department lowered the expected wheat supply remaining when the marketing year ends May 31 to 443 million bushels from 494 million estimated earlier. That would be the smallest amount in the country`s elevators and grain bins since the spring of 1974.
”Nobody is arguing with the department`s production figures,” said James Quinton, grain analyst with AgriVisor, a market advisory service affiliated with the Illinois Farm Bureau. ”But a predicted 30 million increase in usage is questionable. Still the report is bullish for wheat prices.”
Frank Kouba, vice president of Shearson Lehman Hutton Inc. and a Chicago Board of Trade panelist discussing the report, agreed that the carryover figure would help firm wheat prices but that the Soviet import cut would depress prices.
The analysts had nothing encouraging to say about soybean prices, given increased U.S. and South American production, plus expected higher supplies when the crop year ends next Sept. 1.
Given the bearish factors, there is a potential for soybean prices to drop another 5 percent, or 25 cents to 27 cents a bushel, said David Keefe, vice president of Rodman & Renshaw Inc.
