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WAITE MEMORIAL BOOK COLLECTION
DEPARTMENT OF AGRICULTURAL AND APPLIED ECONOMICS
DG.
232 CLASSROO

e FRB CHICAGO

1994 BUFORD AVENUE,
'11/1 ;
ST. PAUL, Mt11410;!

rC 08

AGRICULTURAL LETTER
FEDERAL RESERVE BANK OF CHICAGO
November 18, 1988
Number 1747

World grain and oilseed production
Estimates of the drought-damaged U.S. grain and
soybean harvest have been revised upward slightly the
past couple of months. But from a worldwide perspective, the upward revisions in estimates for the
United States have been offset by a scaling down of
the bumper production prospects elsewhere. The latest U.S. Department of Agriculture estimates point to
a worldwide grain harvest of 1,533 million metric tons
in the 1988/89 crop year. This estimate, which combines wheat, coarse grain, and rice production, foreshadows a 4 percent decline from last year and the
smallest world grain harvest in five years. The estimate
for world oilseed production in 1988/89 is currently
pegged at 200 million metric tons, down 3 percent
from last year but otherwise the second largest on record.
The latest USDA estimates of U.S. and world crop
production totals were released on November 9. In
general, the world estimates for a given crop year
combine the harvest results for Northern Hemisphere
countries during the latter half of one calendar year
with the harvest results for Southern Hemisphere
countries during the first half of the following calendar
year. Many Southern Hemisphere crops that will be
included in the 1988/89 crop-year totals were in the
early stages of planting and/or plant development at
the time the latest estimates were made. Since the
harvest results for these crops are still subject to the
vagaries of weather, the current estimates for 1988/89
crop production in some countries are still very preliminary. Nevertheless, the track record of the USDA's
November estimate of foreign grain production has
been reasonably accurate in recent years. Over the
past 7 years, the changes between the November estimate and the final estimate of foreign grain production have averaged less than 2 percentage points.
For foreign soybean production, however, the revisions to the November estimates typically have been
larger, averaging a little over 4 percentage points.
The latest projection of world grain production in
1988/89 encompasses estimates of 502 million metric
tons for wheat, 710 million metric tons for coarse
grains (corn, sorghum, oats, barley, and rye) and 320
million metric tons (on a milled basis) for rice. Of the
three components, only rice production is expected to

record an increase. With gains both here and abroad,
world rice production is expected to be up 4 percent
in 1988/89. In contrast, the estimate for world wheat
production foreshadows a nominal decline from last
year as the cut in U.S. production exceeds the
projected gain in wheat production elsewhere. World
coarse grain production is expected to decline 10 percent, reflecting both a sharp decline for the U.S. and,
for the second consecutive year, a 1 percent decline
in foreign coarse grain production.
The current projection for world oilseed production in
1988/89 encompasses estimates of 94 million metric
tons for soybeans, 32 million tons for cottonseed, and
21 to 22 million tons each for peanuts, sunflower seed,
and rapeseed. Flaxseed, copra, and palm kernel accounts for the remaining 9.5 million metric tons of estimated world oilseed production. Among the major
components, projected declines of nearly 9 percent
for soybeans and 5 percent for rapeseed account for
Recent trends in world grain
and oilseed production
1984/85

1985/86

1986/87

1987/88

1988/89'

million metric tons
Grains
Wheat
U.S.
Foreign

511.8
70.6
441.2

499.8
66.0
433.8

529.6
56.9
472.7

504.5
57.4
447.1

502.1
49.3
452.7

Coarse grains"
U.S.
Foreign

814.0
237.7
576.3

841.7
274.9
566.8

833.3
252.8
580.6

789.7
215.7
574.0

710.0
142.2
567.8

Rice (milled)
U.S.
Foreign

319.2
4.4
314.8

320.1
4.3
315.8

318.4
4.3
314.1

308.7
4.0
304.7

320.5
5.0
315.5

Total grains
U.S.
Foreign

1,645
313
1,332

1,662
345
1,316

1,681
314
1,367

1,603
277
1,326

1,533
196
1,336

Soybeans
U.S.
Foreign

93.1
50.6
42.5

97.0
57.1
39.9

97.9
52.8
45.1

102.9
52.3
50.5

94.0
41.1
52.8

Other oilseeds-•
U.S.
Foreign

97.8
8.5
88.7

99.0
8.3
90.7

96.4
6.6
89.8

103.5
8.2
95.2

106.3
7.8
98.5

191.0
59.2
131.8

196.0
65.4
130.6

194.3
59.4
134.9

206.4
60.6
145.8

200.3
49.0
151.3

Oilseeds

Total oilseeds
U.S.
Foreign

SOURCE: U.S. Department of Agriculture.
'Preliminary, based on projections as of November 9, 1988.
"Includes corn, sorghum, oats, barley, rye, and millet.
"'Includes cottonseed, peanuts, sunflowerseeds, and flaxseed. Estimates
for foreign and total world production also include rapeseed, copra,
and palm kernel.

1988 corn and soybean production
estimates for District states*
Area harvested
Million
acres

Yield

Percent Bushels
change- per acre

proportionately large share of the projected rise in
foreign production of all oilseeds.
Production

Percent Million
change** bushels

Percent
change**

Corn
Illinois
Indiana
Iowa
Michigan
Wisconsin

9.5
4.8
10.4
1.6
2.0

+4
+3
+3
-18
-30

Dist. states

28.2

United States

56.7

72
78
83
65
70

-45
-42
-36
-32
-41

- 1

76.5

-4

82.3

8.7
4.2
7.8
1.2
.4

0
-3
- 1
+11
+25

Dist. states

22.4

United States

56.8

684
374
863
104
136

-43
-41
-34
-44
-59

-40

2,162

-41

-31

4,671

-34

27
28
30
28
31

-29
-30
-31
-20
-18

235
118
236
34
12

-29
-32
-31
-11
+2

0

28.4

-29

634

-29

0

26.6

-21

1,512

-21

Soybeans
Illinois
Indiana
Iowa
Michigan
Wisconsin

'USDA estimates as of November 9, 1988.
"From 1987.

the bulk of this year's anticipated decline in world
oilseed production.
Despite recent upward revisions, the drought-reduced
U.S. grain and soybean harvest accounts for all this
year's anticipated declines in world production of all
grains and oilseeds. The latest U.S. Department of
Agriculture estimates point to a U.S. grain harvest of
196.5 million metric tons, up 3 percent from the estimate made two months earlier but still 29 percent
lower than last year. Reflecting both the drought and
the large acreage held out of production under government farm programs, this year's U.S. grain harvest
will likely be the smallest since the corn blight year of
1970. Elsewhere in the world, production of all grains
is expected to total 1,336 million metric tons, up 1
percent from last year and second only to the foreign
grain harvest of 1986/87. The anticipated rise in total
foreign grain production encompasses projections of
sizable gains for Australia, India, and the 12 countries
comprising the European Community. In contrast, the
drought-reduced Canadian grain harvest is likely to be
off by a third from last year while that for the USSR and
China is expected to be off 5 and 3 percent, respectively.
U.S. oilseed production is expected to total 49 million
metric tons, up 1 percent from 2 months ago but
down 19 percent from last year and the lowest since
1976. Elsewhere in the world, oilseed production in
the 1988/89 crop year is expected to total 151.3 million
metric tons, up 4 percent from last year and another
new high for foreign oilseed production. An anticipated 12 percent rise in the combined soybean harvest for Brazil and Argentina accounts for a

The recent upward revisions to the U.S. grain and
oilseed production estimates have come primarily in
the corn and soybean estimates. The latest U.S. corn
production estimate, at 4.67 billion bushels (equivalent
to 118.7 million metric tons) is up nearly 5 percent
from the projections of two months ago but still off 34
percent from last year. The estimate reflects a harvested area of 56.7 million acres and a national average corn yield of 82.3 bushels per acre. Reflecting the
extensive drought losses, the yield estimate is off 31
percent from last year's record high and only marginally above the 9-year low set during the 1983
drought.
The nation's 1988 soybean harvest, now estimated at
1.51 billion bushels (41.1 million metric tons), is up 3
percent from the projection of 2 months ago but still
down 21 percent from last year. The latest estimates
peg the average soybean yield at 26.6 bushels per acre,
down 21 percent from last year and just slightly above
the seven-year low set in 1983. Some 56.8 million
acres of soybeans were harvested, only nominally less
than last year. Ironically, harvested soybean acreage
this year will likely exceed that for corn. The only
other year that harvested soybean acreage in the U.S.
exceeded that for corn was in 1983 when, similar to
the situation this year, substantial corn acreage was
held out of production under government price support program provisions.
The U.S. share of world grain production has varied
widely in some years, largely reflecting weather conditions here and abroad and sudden shifts in U.S. government price support programs that raise or lower
the acreage devoted to grains domestically. But excluding years of major drought in the United States,
there has been a remarkable consistency in the U.S.
share of world grain production since the early 1960s.
With this year's drought, it appears the U.S. share of
world grain production will fall to less than 13 percent.
But during the past four years, the U.S. share of world
grain production averaged 19 percent, identical to the
share held by the United States in both the mid 1970s
and the mid 1960s.
The consistency over time in the U.S. share of world
grain production holds for both coarse grains as well
as the combined total for wheat and rice. Over the
past four years, the U.S. accounted for just under 30
percent of world coarse grain production, up only
marginally from the roughly 28.5 percent share held in
both the mid 1970s and the mid 1960s. The U.S. share
of combined wheat and rice production in recent
years averaged just over 8 percent, only marginally
below the levels of 10 and 20 years ago.

•

•

While the U.S. share of world grain production has
held fairly constant over time, the U.S. share of world
oilseed production has tumbled since the mid 1970s.
During the past four world crop production years
(1984/85-1987/88) the U.S. accounted for 31 percent
of world oilseed production, down from 36 percent in
the mid 1970s. The decline in the U.S. oilseed share
stems partly from the rapid growth in foreign production of oilseeds not grown in the United States. For
instance, average annual world production of
rapeseed in the mid 1980s was 2.5 times the level of
the mid 1970s. In the same vein, world palm kernel
production in the mid 1980s was 2.3 times the level of
the mid 1970s. In addition, the declining U.S. share of
world oilseed production stems partly from the faster
growth in soybean production abroad than here at
home. Reflecting this, annual U.S. soybean production
from 1984 through 1987 averaged only 27 percent
above the average of the mid 1970s. Elsewhere in the
world, soybean production in the mid 1980s averaged
more than 80 percent above a decade earlier. With
the slower growth domestically, the U.S. share of
world soybean production dropped from 63 percent in
the mid 1970s to 54 percent in the mid 1980s.
For at least the last two decades, the rapid growth in
foreign soybean production has been centered in
Brazil and Argentina. Together, those two countries
harvested 27.7 million metric tons of soybeans in the
1987/88 crop year, more than double their joint output
a decade earlier and equivalent to 27 percent of world
soybean production last year. Projections for the current crop year foreshadow a combined soybean harvest of 31.0 million metric tons from Brazil and
Argentina. More recently, soybean production within
the twelve countries comprising the European Community have contributed to the rapid foreign growth.
Last year, soybean production in the EC reached 1.8
million metric tons up from only 0.1 million tons 4
years earlier. While soybean production in the EC declined this year, to an estimated 1.6 million tons, that
still equates to the output from Brazil and Argentina
as recently as the early 1970s.

Share of world grain production*
(average, 1985/86-1987/88)
EC-12
9.5%

Canada
3.2%

other
Europe
7.5%

United
States
18,9%
USSR
11.7%

all other

China
18.0%

South Africa &
Turkey 2.0%
Argentina &
Australia 2.8%
India
7.9%

Brazil &
Mexico 3.4%
other Asian**
4.0%

*Includes wheat, coarse grains, and milled rice.
**Indonesia, Pakistan, and Thailand.

Gary L. Benjamin

AGRICULTURAL LETTER (ISSN 0002-1512)1s published bi-weekly by the
Research Department of the Federal Reserve Bank of Chicago. It is
prepared by Gary L. Benjamin, economic adviser and vice-president,
Peter J. Heffernan, economist, and members of the Bank's Research
Department, and is distributed free of charge by the Bank's Public Information Center. The information used in the preparation of this
publication is obtained from sources considered reliable, but its use
does not constitute an endorsement of its accuracy or intent by the
Federal Reserve Bank of Chicago.
To subscribe, please write or telephone:
Public Information Center
Federal Reserve Bank of Chicago
P.O. Box 834
Chicago,IL 60690
Tel.no. (312) 322-5111

Selected Agricultural Economic Indicators
Percent change from

Receipts from farm marketings ($ millions)
Crops'
Livestock
Government payments
Real estate farm debt outstanding ($ billions)
Commercial banks
Farm Credit System
Life insurance companies
Farmers Home Administration
Nonreal estate farm debt outstanding
Commercial banks
Farm Credit System
Farmers Home Administration

Latest
period

Value

July
July
July
July

11,914
5,254
6,419
240

Prior
period

Year
ago

Two years
ago

2.8
-2.6
5.9
71.4

8
43
0
-76

24
47
5
n.a.

24
-25
-15
-3

June 30
June 30
June 30
December 31

14.0
28.7
9.58
10.1

33
• t
-1 5
' t
0.1

10
-8
-7
-3

June 30
June 30
December 31

28.7
9.5
16.0

77
t
6.8t
-1.1

0
-5
-2

-12
-24
-4

38
t
3.9
0.0

3
3
2

3
3
42

oar

billions)

Interest rates on farm loans (percent)
7th District agricultural banks
Operating loans
Real estate loans
Commodity Credit Corporation

October 1
October 1
November

11.67
11.04
8.12

Agricultural exports ($ millions)
Corn (mil. bu.)
Soybeans (mil. bu.)
Wheat (mil. bu.)

September
August
August
August

3,180
154
36
114

10.5
21.8
21.6
-5.3

36
38
-34
-4

66
199
75
-8

October
October
October
October

6,158
3,992
2,166
990

61.7
48.7
92.9
16.1

11
2
36
-36

22
7
63
-30

Farm machinery salesP (units)
Tractors, over 40 HP
40 to 139 HP
140 HP or more
Combines

N.A. Not applicable.
"Includes net CCC loans.
Prior period is three months earlier.
P Preliminary

t

AGRICULTURAL LETTER
FEDERAL RESERVE BANK OF CHICAGO
Public Information Center
P.O. Box 834
Chicago, Illinois 60690

DEC-6'88

'411

3319848

(312) 322-5111

AGDO1
LOUISE LETNES LIBRARIAN
DEPT OF AGRIC & APPLIED ECON
231 CLASSROOM OFFICE BUILDING
1994 BUFORD AVENUE
ST PAUL MN 55108-1012

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