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Economic Research Service, USDA
January 09, 2004

Supplies To Tighten, Prices To Rise
Supplies of U.S. dry edible beans in 2003/04 will be smaller than a year ago. With the industry indicatingrelatively modest carryover stocks for most classes and imports traditionally low, the small 2003 crop will leave supplies down and prices up. Given average domestic and export demand, stocks of several bean classes are likely to be relatively low by next summer. Stocks of black beans and navy beans are expected to sink to minimal levels by the end of the marketing year. Assuming good export demand, pinto beans could begin 2004/05 with stocks similar to the lows of 2 years ago.

Lower supplies and slowly rising prices this coming winter and spring could provide interesting challengesfor some growers regarding planting decisions next spring. This will be especially true in soybean areas with U.S. season average soybean prices approaching or exceeding $7 per bushel for the first time since 1996. Average prices for wheat and corn in 2003/04, although expected to be lower than a year earlier, will likely exceed the low levels of 2001/02.









Production Estimates Revised, Estimates by Class Released
The USDA estimate of 2003 U.S. dry edible bean production was reduced this month to 22.8 million cwt--24 percent below the crop of a year ago. Harvested area was down 21 percent from a year ago and yield was 3 percent lower. The national average yield of 16.78 cwt per acre was virtually the same as the estimated 40-year trend. The largest reduction in output from a year earlier occurred in Michigan (down 50 percent), where area planted was a record low 170,000 acres. Output was also reduced in Washington (down 36 percent) and North Dakota (down 27 percent). Increases in output were noted in several smaller producing States such as NewYork (up 34 percent) and Wyoming (up 19 percent).

The first estimate of dry bean production by class was released by USDA on December 11 (table 10). Output was reduced for 8 of the 13 identified classes. Among the 5 classes with larger output, gains in Great Northern (up 41 percent) and blackeye beans (up 37 percent), were most notable. The largest percentage decline among the major classes was in black beansdown nearly 60 percent. Output of pinto beans, which accounts for the largest share (47 percent) of the U.S. dry bean crop, fell 17 percent. Output of navy beans, the second largest class, plummeted 52 percent, and garbanzo beans were down 49 percent. Output of Great
Northern beans jumped as a 17-percent increase in Nebraskas area harvested was joined by a 16-percent rise in yield. With national dry bean yields performing at trend levels, most of the cutback in dry bean output this year was prompted by economicsi.e., low bean prices relative to other crops.

Production of black beans plummeted because of a 56-percent cut in harvested area (particularly in Michigan and New York) was compounded by an 8-percent reduction in yields. Although last years crop was the third largest on record, stocks coming into this year were relatively modest, contributing to early grower price strength. November grower prices for black beans were nearly 60 percent greater than a year earlier.









Dry Bean Exports Up Through October
Despite the small crop, U.S. dry edible bean export volume during the first 2 months (September and October) of the 2003/04 marketing year was up 14 percent from the same time a year earlier. Black beans (up 227 percent), Great Northern beans (up 186 percent), and small red beans (160 percent) led the increase. Greater shipments to Iraq, the Dominican Republic, Haiti, and Zambia, plus larger sales to Mexico (up 58 percent) were the driving force behind early dry bean exports in 2003/04.

Despite sluggish dry bean markets early in the season, imports (excluding guar seeds) during September-October were up 12 percent, led by pinto beans (up 507 percent). Over the past decade, imports have slowly gained a foothold in several U.S. dry bean markets, with the share of total dry bean consumption accounted for by imports about doubling from more than 4 percent in 1990-92 to 9 percent during 2000-02.












Navy Beans Down, Prices Rise
As expected, navy (pea) bean production in 2003 has dropped. Output was down in every State but Wyoming, with industry-leader North Dakotas crop down 50 percent and Michigans crop down 63 percent to the second smallest on record. Navy bean production in Michigan was slashed as acres harvested fell 55 percent and average yield declined 19 percent. In North Dakota, navy bean yields improved 6 percent from a year earlier, while harvested area dropped 53 percent as growers turned to other crops.

The smaller crop means 2003/04 navy bean supplies are substantially reduced. As a result, navy bean prices have strengthened and should continue to gain as the marketing year progresses. Michigan navy bean grower prices began the marketing year in September at $16.00 per cwt--up 16 percent from a year earlier. Prices had climbed to $17.50 by mid-December59 percent above last Decembers low levels. With marketable stocks expected to be nearly exhausted by the close of the marketing year and prices likely to move higher, the stage is set for a substantial increase in area and production in 2004.

Navy bean exports improved in 2002/03, with volume up 5 percent from a year earlier. Increased movement to Canada, South Africa, and Australia outweighed reduced movement to the UK (down 13 percent), New Zealand (no sales), Italy (down 67 percent), and Mexico (down 32 percent). In the coming year, exports are expected to decline due to short supplies. Exports accounted for about 24 percent of supplies in 2003the same share averaged during the 1990's.


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