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Grain Supply Update: Oct. 16, 1996



Grain Supply Update: October 16, 1996

        Final ’96 Food Supply Figures & Outlooks Rolling In
                  (c)  Geri Guidetti, 1996

Watching this week’s agricultural and commodities prices headlines in 
the national newspapers might lead you to believe that we are soon to be 
buried under mountains of grain and beans from this season’s harvest.  
Below are the facts, most of which did not make it to the national media 
this week:

Source: National Agricultural Statistics Service, Agricultural 
Statistics Board, U.S. Department of Agriculture. This report was 
approved on September 30, 1996, by the Acting Secretary of Agriculture, 
Richard E. Rominger.

"....Old crop corn stored in all positions on September 1, 1996, is 
estimated at 426 million bushels, down 73 percent from September 1, 
1995.  This is the lowest ending stocks since 1976......Old crop 
soybeans stored in all positions on September 1, 1996 totaled 183 
million bushels, down 45 percent from stocks on hand one year 
ago.....All wheat in all storage positions September 1, 1996 is 
estimated at 1.72 billion bushels, down 8 percent from September 1, 
1995.  This is the lowest September 1 stock level since the reference 
date was changed in the 1986-87 marketing year....Oats stored in all 
positions on September 1, 1996 is estimated ate 133 million bushels, 26 
percent below the stocks of September 1, 1995."

The above report is referring to the so-called ending stocks that we 
have been talking about in these updates for the past several months.  
Keeping these in mind, below are some of the recent figures and 
production forecasts for wheat and corn:

Wheat 

Source: Economic Research Service, U.S. Dept. Of Agriculture, Oct. 15, 
1996

*U.S. wheat production drops 14 million bushels from the September 
forecast.
*World wheat production second highest on record
*U.S. September 1 stocks lowest recorded
*U.S. feed and residual use up 25 million bushels
*U.S. ending stocks down 36 million from September forecast

Though the USDA’s Small Grains Summary increased its estimates of   
durum, hard red spring and white spring wheat harvests, they reported 
that the increases were not large enough to offset the large declines in 
winter wheat, despite the fact that this season’s total wheat harvest 
was up 99 million bushels from ‘95’s  poor crop.  On a brighter note, 
world wheat production for the 1996/97 season is projected to be nearly 
45 million tons higher than the 1995/96 season.  This would represent an 
8 percent increase; the EU and Australia are seen as major exporters.  
Another source of the potential increase in world wheat for ‘96/’97 is 
thought to be Canada, though bad weather is hampering harvest and 
causing a decline in wheat quality.  Much of this wheat will be used for 
animal feed.

Corn

Good news: Improved yield prospects for this season’s corn crop as a 
result of recently better weather and field conditions may result in a 
harvest that will be 22 percent larger than the 1995 harvest.  This 
would be quite a blessing considering the late plantings, short season 
corn substitution, etc., in the corn belt states 

As I reported earlier this season,  the corn supply shortage caused 
industrial ethanol producers to close this summer or cut back production 
dramatically. The better than expected corn crop has allowed some of 
these producers to restart their plants.  Corn targeted for this market 
is projected to increase 14 percent from the 1995/96 season, but this is 
still below production in the 1994/95 season. The demand for corn used 
in the production of corn sweeteners is expected to remain strong, but 
that used in the production of alcoholic beverages for export is 
expected to decline.

Because of the very low supplies and very high prices of feed corn this 
summer, both dairy and feeder beef cattle herds were reduced. Milk 
production dropped and the prices of milk and milk products have risen. 
 It appears, thus far, that the milk cow herd reduction has remained 
steady.  Cattle on feed for beef production, however, are on their way 
back up because of the better projections for corn available to feed 
them this year.  Though feed corn prices have dropped from their record 
highs this summer, they remain relatively high. The trend for future 
food prices continues to be up.

What is the bottom line for domestic supplies?  First, there should be 
enough corn for this year’s daily needs and exports.  But, despite the 
fact that ending stocks are expected to improve current, historically 
low supplies, the report states: "Nonetheless, stocks will remain well 
below 1994/95."  I’ll go a step further to put that in perspective: the 
supply of corn remaining in our stockpiles at the end of summer 1997, 
those ending stocks from this season’s harvest which are available to 
feed us until the next harvest is realized, will be measured in days or, 
if exports are down, perhaps weeks.  They will not be measured in 
months. 

The fundamental questions of personal food security still remain: What 
would you do—what would we all do—if there was little or no harvest this 
year or next?  Can we, as individuals and families, afford the luxury of 
complete dependence on a day-to-day, commercial food supply pipeline 
when there is no longer a comfortable national or global food reserve 
"cushion?" .....Geri Guidetti, The Ark Institute
**********************************************************************
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This report may be reprinted if copyright and Sig. File remain intact.