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Wheat, corn export outlook hampered by competition

Corn exports for the U.S. are expected to grow only marginally for 2005/06, while overseas sales of wheat are projected to drop 5 percent, according to the USDA's predictions at its Agricultural Outlook Forum 2005 at Arlington, Va.

The small increase in corn exports will be due to “strong competition, especially from Argentina,” said Jerry Norton, agricultural economist with the USDA's Farm Services Agency. “There was a bumper crop in Argentina in 2004, which boosted exportable supplies and exports.

“Even if production slips in 2005, Argentina is expected to remain a formidable competitor. Also, rising stocks in the European Union countries could present a problem for the EU that might lead to an increase in corn exports to countries outside the EU.”

Exports of U.S. corn are projected up by 50 million bushels, to 1,950 million bushels, for 2005/06, he said.

World imports of corn for 2004/05 are expected to post a “substantial decline” when final figures are in, and “no quick turnaround is expected in 2005/06.”

The report, prepared by the USDA's Wheat, Feed Grains and Oilseeds Interagency Commodity Estimates Committees, noted that China “remains the chief source of uncertainty ahead. Its long-awaited switch from net corn exporter to net importer does not appear likely to occur in 2005, following a very large 2004 crop. But continued gains in domestic use and falling stocks mean that China's exports will decline in 2005/06.”

Ending stocks for corn are projected to rise slightly to 2.1 billion bushels and the stocks-to-use ratio is projected at 19.5 percent, also up slightly from 2004/05.

“This will keep pressure on prices, with the average price received by farmers projected at $1.90 per bushel.”

With an expected smaller U.S. wheat crop and smaller supplies, coupled with strong world competition, exports are expected to decline 5 percent to 975 million bushels, the report noted.

“World supplies will be near year-earlier levels as larger carry-in stocks offset a decline in production from the 2004 record,” Norton said. “Stocks are building in Europe, and a return to export subsidies ahead of another large crop signals that the European Union will again be a major exporter in the highly competitive Mediterranean market. With good crop prospects, the Black Sea region could also put pressure on U.S. shipments.”

Canada is expected to see a rebound in the quality of its wheat, he said, which could cut into U.S. spring wheat sales. In 2004/05, poor harvest weather reduced Canada's production of high quality wheat, which helped push U.S. hard red spring wheat exports to an eight-year high.

Ending wheat stocks for 2005/06 are forecast at 571 million bushels, up 13 million bushels from 2004/05, and the stocks-to-use ratio of 26.7 percent is above the 25.2 percent forecast for 2004/05. Prices to producers are projected at $3.20 per bushel.

e-mail: hbrandon@primediabusiness.

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