Business Notes CROPS

When the Agriculture Department released its first estimate of drought damage last month, the news was grim. But when an updated outlook was released last week, the figures were even worse. The Government forecast that the year's corn harvest will reach only 4.48 billion bu., down 37% from last year. A month ago, the decline was pegged at 26%. The estimate of the wheat harvest, down 13% for the year, is virtually unchanged from July, but the soybean crop is looking far more stunted than it did a month ago. Production may total just 1.47 billion bu., off 23% from last year. The Government had previously expected a 13% shortfall.

Such a discouraging report might have caused grain futures to surge at the Chicago Board of Trade, but traders expected the worst and took the news in stride. Prices for corn and soybeans actually fell slightly the day after the report was released. Still, prices were far higher than before the drought got bad. Soybeans sold for $8.50 per bu., up from $6.92 in May, and corn was $2.87 per bu., compared with $2.02 three months ago.

As disheartening as the federal crop estimates are, they may prove too optimistic, says Conrad Leslie, a private crop forecaster. He puts the corn crop at less than 4 billion bu. and soybeans at 1.4 billion bu. Says he: "This is the worst drought of the century."