Crop prices are heading to year-end on a weak note. Corn prices are near the level that existed in the first week of January and well below the late summer highs. Soybean prices are well below the level at the start of the year and at the lowest level since early October 2010. Prices of soft red winter wheat are at the lowest level since July 2010.
The USDA’s monthly report of U.S. and world supply and consumption prospects, released on December 9, underscores the reasons for the current price weakness. The 2011 U.S. corn and soybean crops were the smallest crops in three years and the wheat crop was the smallest in 5 years, but foreign production of these crops was record large. The foreign coarse grain crop exceeded the previous record crop of a year ago by 7 percent, foreign wheat production was up by 7.3 percent, and foreign soybean production was 2.4 percent larger than the previous crop. Production prospects also remain favorable for the current southern hemisphere crops. Combined wheat production in Australia and Argentina is expected to be only about 2.5 percent smaller than last year’s large output. Combined corn production in South Africa, Argentina, and Brazil is expected to be 11 percent larger than that of 2011, and South American soybean production is expected to increase by 1.5 percent. <Read More>
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