(Continued from Page E 4)
Domestically, relatively high
soybean meal prices ran into
cheap wheat (which furnished
more protein than found in com)
and unprofitable livestock prices.
In 1965, less expensive meal,
produced when soybean oil
demand was hot, increased
utilization but not soybean prices.
A strong dollar, competing
oilseeds and meals, and vigorous
Chinese and South American
soybean exports knocked the props
from under U.S. soybean sales and
prices in the world market. ’
Now, coming on the heels of poor
demand and low prices, we find the
carryover this year almost double
that of last year (318 million
bushels versus 176 million in 1964)
with a large crop (2.108 trillion
bushels versus 1.861 billion in 1964)
piled on top of that.
Utilization this season is not
expected to cover even the crop,
much less the carryover, so the
1966 carryover is projected to rise
to 600 million bushels.
Domestic crushings during 1964-
"W
85 totaled 1.03 billion bushels, up
from the 963 million bushels in
1963-84. The crush for 1965-86 is
expected to increase only
marginally to 1.065 billion bushels,
and more of the soybean price will
have to be recovered from meal
because competing oils have cut
the demand for soybean oil.
Contrary to rational reasoning,
soybean exports in 1964-85 of 596
million bushels actually fell from
the previous year’s 743 million
bushels, despite a short crop and
much higher prices in 1963-84. The
1985-85 outlook is for a very modest
increase to 675 million bushels,
which will not do much to enhance
prices.
Soybean demand needs a price
low enough (it should already be
there) and long enough to generate
supply tightness. Some of this will
be artificially induced by all
producers being eligible for the
$5.02 national loan. NatuiaUy,
some producers will not be able to
participate because of a lack of
approved storage, but free stocks
will tighten much faster than
without the loan provision.
The supply-demand unbalance
will not be corrected but it will be
improved because China’s soybean
crop was down because of the
situation in South America. Brazil
and Argentina rushed their 1985
soybeans and products in to the
market to beat the price drop, and
they (especially Brazil) oversold.
From now until April or May, U.S.
beans and meal will almost have
the world market to themselves.
As a result of the sharp South
American decline, soybean
crushing in the U.S. and European
Community alone may go up 12
percent between October and
March. World crushing is expected
to be up 6 percent.
The picture may be further
improved if two other possibilities
come through. South American
(particularly Brazilian) producers
are said to be discouraged by low
bean prices. They may plant fewer
acres, and production could drop
by more than a million metric tons.
Weather presents another,
though less reliable possibility. It
had been very dry in some of South
America’s soybean areas. Dry
w
weather at planting time late this
fall could further reduce acreage.
And, if it persists, it v.ould reduce
yields on planted acres.
Despite these potential bright
spots, soybean futures do not
reflect much improvement
(November beans about $5.05 and
July beans about $5.50). Thus any
price improvement will have to
originate with a squeezed cash
market.
BICEP
Uncaster Farming, Saturday, February 8,1986-E5
With a substantial quantity of
beans under loan, farmer prices
will have to cover loan rate, in
terest and storage costs to bid
them out.
The USDA price projection last
fall for 1964-85 soybeans was $5.75
to $7.25. Even with this wide range,
the average farmprice of $5.85 was
just barely covered.
The projection for 1985-86 is $5.05
to $5.35, a much narrower range,
so they must feel certain there will
be no price explosion.
Cattle and hog numbers will be
down and poultry cannot take up
the soybean meal slack com
pletely. Thus, for prices to improve
materially, the demand will have
to come from overseas between
harvest and March, 1906. That
much extra demand is possible but
not probable.
WHEAT
The overall U.S. wheat picture in
terms of supplies, surpluses and
price is one big frustration. The
carryover on June 1,1963 was 1.399
billion bushels. This figure was up
to 1.424 billion in 1965 and is
projected to go on up to 1.738 billion
by June 1.1966.
Exports hold the key to wheat
utilization, and the U.S. is being
bombed out of the world market by
termendous competing supplies
and lower prices offered by ex
porting competitors. In fact, this
year’s domestic use may exceed
exports for the first time in 13
years.
Hard wheat producers may
derive some benefit from Canada’s
short crop and poor harvesting
conditions, which will limit both
quantity and quality of their export
wheat. Since China dropped out of
the U.S. customer list, soft red
winter wheat exports have been
mostly limited to small batch
purchases and foreign aid ship
ments.
Soft red winter wheat production
in 1964 was 552 million bushels.
Poor planting conditions in the
Middle West last fall combined
with the wheat program to cut the
1965 production to 370 million
bushels. Despite a lack of Chinese
purchases, this short crop will
leave a carryout of 65 million
bushels, practically from the
carryout in 1965.
Wheat prices in general and soft
red winter prices in particular
have been depressed and show no
real signs of recovery. Unless
something unforeseen intervenes,
the 1966 harvest price will be even
lower.
New York DHI
names
New Hampshire
manager
Brenda Burbank began working
for New York DHI as regional DHI
manager for New Hampshire on
November Ist, 1985, following the
state’s recent contract with New
York DHI. In November, New
Hampshire joined Massachusetts
and Connecticut in yet another step
toward the formation of a North
east DHI cooperative.
Burbank was born in Portland,
Maine. After graduation from
college, she held two part-time
jobs, working on a dairy farm and
as an elementary school teacher.
From 1978 to 1984 she worked as a
DHI supervisor in Vermont and
New Hampshire before assuming
the position of field coordinator for
New Hampshire and Vermont in
August of 1984. Since July 1985,
Burbank worked full-time in New
Hampshire to centralize funding
and rules and to organize super
visors.
Burbank believes that proper
training of supervisors is the key
not only to providing good DHI
services, but also to promoting
those services. The contract with
New York DHI will help give New
Hampshire supervisors better
training and needed management,
Burbank says.
Even though the contract brings
a possible 25 to 30 percent increase
in herd fees, members are excited
about the move, Burbank says. She
adds that members realized they
needed to make changes. She says
employees will be trained better
and stay longer under the contract
with New York DHI, and that
Extension personnel will now be
freed from managing DHI to
perform other duties for New
Hampshire dairymen.