CHICAGO, Ill. — Soybeans are on track for a record harvest although the corn forecast dimmed slightly, according to the USDA’s Oct. 12 Crop Production Report and World Agricultural Supply and Demand Estimates.

Market analysts discussed the report and what it means on the floor of the Chicago Board of Trade that morning.

Corn yield is estimated at 10.9 billion bushels, down 209 million bushels from September’s forecast, and down 4 percent from 2005. Vigorous demand for corn by export markets and U.S. ethanol plants has driven prices higher and is expected to slash corn surpluses by half, the USDA said.

Prices should range from $2.40-$2.80 per bushel, an increase of 25 cents on last month’s estimate.

Jim Bower, president of Bower Trading Inc., believes China is “hoarding their corn and wheat inventory. They are willing to take a gamble on soybeans as their backup.”

He said China has increased its ethanol use with “unheralded growth” in its automotive industry.

Jerry Gidel, president of Midland Research Inc., agrees the ethanol industry is playing a role in the market.

“The corn numbers themselves accentuates that the ethanol situation is substantial and will be more dynamic into 2007,” Gidel said. “This dynamic will keep corn firm.”

Soybean production is forecast at 10.9 billion bushes, up 3 percent from last month’s forecast and up 4 percent from last year’s crop. There was no change in the soybean price estimate of $4.90-$5.90.

“It looks to me like the market does not want to trade at significantly lower prices. It appears to be quite stable,” said John Welsh, senior vice president of Peregrine Financial Group. “Maybe farmers will be able to make larger payments on their debt this year. Personally, I don’t see anything high about these prices. Production has kept up with demand.

“From a financial standpoint, with the current price of farmland, it’s a struggle at these prices. In order to keep our food prices cheap, we need to give the farmers modestly more for their products.”

Bower added, “I think everyone should exercise caution. Let the market tell us what it wants to do.

“The weather forecast doesn’t look good for the next couple of weeks. There’s still a lot of crop out there in the Northwestern Cornbelt. We could get some more loss out there.”

This farm news was published in the Oct. 18, 2006 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.