WASHINGTON (AP) - A worldwide surplus of grain and soybeans is likely to push prices for many commodities down again this year, given the big crops that farmers are planting this spring, the Agriculture Department said today.
Soybean prices, which averaged $4.65 per bushel in 1999, will decline for the fourth year in a row this year with U.S. production expected to rise 12 percent, the Agriculture Department said.
Prices this year will range from $4 to $5 a bushel, with a midpoint of $4.50, the department said.
Rice prices are expected to decline, too, because of large domestic and global supplies. Prices should range between $4.75 to $5.75 per hundred pounds, down from an average of $6.05 to $6.15 last year.
Corn prices also are likely to drop several cents a bushel this year, while prices for wheat will rise some, USDA said.
The price declines are unlikely to have much impact in supermarkets, because the cost of raw ingredients and animal feed account for just a small portion of consumer food prices. But the declines would increase government outlays, because federal crop subsidies rise as commodity prices fall.
Commodity prices collapsed in 1998 because of financial problems in Asia and heavy worldwide crop production and are expected to recover slowly through the coming decade. Congress is considering a third multibillion-dollar bailout of the U.S. farm economy in as many years.
The price of corn averaged between $1.85 to $1.95 in 1999. The price should range between $1.60 to $2 a bushel this year, with a midpoint of $1.80, USDA said.
Wheat prices, which averaged $2.50 per bushel in 1999, are expected to range between $2.40 to $2.90 this year.
U.S. production of winter wheat is down 3 percent this year, as a drought severely damaged the crop in Texas. The state is expected to produce just 70.4 million bushels - less than Ohio and five other states - compared to 122.4 million bushels in 1999.:
