Not since 1944 has the US planted anywhere near that much corn, but USDA reports planting intentions of 90.454 mil. acres. That is up 15% from 2006 and 11% from 2005 and reflects increased acreage in nearly all corn growing states( except MA) as farmers have responded to an ethanol-fueled, demand driven market unseen in many generations.
Among the Cornbelt states, intended acres and percentage of increase from 2006: IL: 12.9 mil 14% IN: 6.2 mil 13% IA: 13.9 mil 10% KS 3.7 mil 10% MI: 2.5 mil 14% MN 7.9 mil 8% MO: 3.4 mil 26% ND 2.6 mil 54% OH: 3.6 mil 16% NE 9.0 mil 11% SD 4.9 mil 9% WI 4.0 mil 10%
Soybean, along with cotton and rice acres, would be sacrificed to make way for more corn, if the current intentions become reality. USDA projects soybean acreage at 67.140 mil. acres, an 11% drop from last year and the least since 1996. However, soybean acreage is expected to expand in the Southeast, and record high acreage in NY.
Among the Cornbelt states, intended acres and percentage of decrease from 2006: IL: 8.7 mil 14% IN: 5.0 mil 12% IA: 9.2 mil 9% KS 2.4 mil 24% MI: 1.7 mil 12% MN 6.7 mil 9% MO: 4.6 mil 11% ND 3.1 mil 21% OH: 4.4 mil 5% NE 4.4 mil 13% SD 3.6 mil 9% WI 1.4 mil 15%
Also responding to higher prices, wheat producers have 60.3 mil. acres planted, up 5% from 2006. Winter wheat is up 10%, including 31.9 mil for HRW and 8.66 for SRW. Spring wheat may be losing about 1 mil. acres, possibly to corn, and USDA reports intentions for cotton acreage are down 20%, with declines in all cotton producing states.
Quarterly grain stock estimates were also released by USDA today. Corn stocks were estimated at 6.07 bil. bu. down 13% from a year ago, with disappearance at 2.86 bil. compared to 2.83 bil. a year ago. Soybean stocks were estimated at 1.78 bil. bu., up 7% from March 2006. Disappearance for the quarter was 917 mil. bu., up 10% from 2006. Wheat stocks totaled 856 mil. bu., down 12% from year ago figures. The quarterly disappearance of wheat was estimated at 459 mil. bu., up slightly from March 2006.
Even major media, such as USA Today and CNN have become interested in the March 30 USDA Planting Intentions Report, labeling it as "the report of the Century." You may or may not agree, but it is big news in the Cornbelt because of its impact on the market.
Grain traders were looking for corn acreage between 86.3 and 90.7 mil. acres with an average of 88 mil. compared to the 78.3 mil. acres planted in 2006. For soybeans, traders were expecting 65.9 to 70.8 mil acres with a 69.2 mil. acre average. That would compared to 75.5 mil. acres planted in 2006. For wheat, traders expected 58.9 to 60.4 mil. acres, with a 59.7 mil average compared to the 57.3 mil. 2005-06 acreage.
Soybean stocks and usage were also reported by USDA. Grain traders had expected 1.801 bil. bu. of beans in storage, following usage of 896 mil. bu. of beans used in the second quarter of the marketing year. Dec. 1 soybean stocks had been 2.697 bil. bu.
US corn stocks as of March 1 were estimated at 6.023 bil. bu. by grain traders ahead of the Prospective Plantings report. That compares to corn stocks of 6.987 bil. bu. Mar. '06. Ethanol usage and export volumes are known, but the market did not know how much corn was kept in storage by producers and how much $4 corn was fed to livestock.
If cash prices don't favorably compare to futures, IL Extension's Darrel Good says blame the basis, which is unusually wide. "The basis is about 6¢ weaker than at this time last year and about 20¢ weaker than the four-year average basis for the third week of March." He says the flow of corn to the market is sufficient to meet the accelerated level of consumption. And he expects it to remain weak until supplies become tight. Read more: http://www.farmdoc.uiuc.edu/marketing/weekly/html/032607.html .
Regarding the soybean basis, Darrel Good says it is 9¢ weaker than in 2006 and 14¢ weaker than the 4-year average. "The new crop basis is also weaker than the actual harvest time basis experienced in recent history, except in 2005 when hurricane Katrina closed the Gulf Port for a period of time. The weak basis currently being experienced is likely a function of high soybean futures prices resulting from high corn prices and anticipation of storage capacity issues. As with corn, the storage capacity issues may not be as extensive as expected, but with substantial regional variation possible."
Farmers planting Syngenta Agrisure Rootworm with the MIR 604 event are being warned by the National Corn Growers that the hybrid has not been approved for export to Japan. Without that approval by harvest time, which is not guaranteed, marketing of the grain could be at risk in normal channels. It could still be fed to livestock in the US.
For $500 per acre you can grow corn in the northern 2/3 of IL, say ag economists there who analyzed 2006 financial records of thousands of farms. The survey reported costs per acre rose 5-8% from higher prices for fertilizer, seed, fuel, insurance and land costs. Total economic costs ranged from $2.74 to $3.11 per bu. Read the entire report at: http://www.farmdoc.uiuc.edu/manage/newsletters/fefo07_05/fefo07_05.html .
For $386 per acre you can grow soybeans in the northern 2/3 of IL, and in southern Il for $341 per acre. The IL Farm Business Farm Management survey found costs per acre rose in all parts of the state. Variable statewide costs accounted for 33% of the total cost of production for soybeans, with other non-land costs at 33% and land costs at 34%.
No surprise, but the Univ. of Mo Food and Agriculture Policy Research Institute: www.fapri.missouri.edu/outreach/publications/2007/FAPRI_UMC_Report_06_07.pdf says bio-fuels are changing agriculture, increasing corn, soy oil, and commodity prices: 1) The combination of increased production and lower petroleum prices is likely to lead to weaker bio-fuel prices and lower net returns to bio-fuel producers. 2) Projected ethanol net returns over operating costs drop to an average of 20¢ per gal. after 2008/09. This may be too low to result in significant further expansion of capacity. 3) For soy bio-diesel, projected net returns over operating costs drop sharply and are actually negative beginning in 2010. Rising soybean oil prices are the principal cause. 4) If current bio-fuel tax credits and tariff protection expire, bio-fuel prices drop, bio-fuel production drops, along with prices for corn, soy oil, and other agricultural commodities. 5) Livestock producers could be more or less able to adjust feed rations to increase use of DDGS, and significantly impact different prices for DDGS and other bio-fuel products.
There are positives in the pork market say Glenn Grimes and Ron Plain at the Univ. of MO, "Retail pork prices for January and February were 0.7% higher than in 2006. Pork marketing margins for the first two months of 2007 were down 2.4% from a year earlier. The smaller marketing margin and the increase in retail prices permitted packers to pay 9.6% more for barrows and gilts for the first two months of 2007 than 2006."
There are also positives in the beef market says Nevil Speer at Western KY, "Talk of a $100 spring market is now seemingly within reach. Perhaps more important is the outlook for closeouts as spring transpires. A month ago April and June contracts were $95 and $92, respectively. But the cash market is $8 better than 30 days ago. Depending on the marketing window cattle feeders have been provided with $75-100 more revenue."
Corn yield can be trimmed 5% or more if wet soils are compacted in the spring from premature field work, then followed by a dry summer. Ohio State's Peter Thomison says, "Depending on the production situation, location, hybrid planted and soil type, mistakes made during planting operations can lead to uneven stands."
As a final thought about the acreage report, expecting 90.5 mil. acres of corn. Most authorities warn that the additional acreage planted to corn will not produce trendline yields, and planting conditions will have to be perfect in the Cornbelt to achieve the potential crop. Most of the Cornbelt is wet and fieldwork in most areas has not begun.
The Extension Update on Central Illinois Agriculture is e-mailed on Friday to selected subscribers and is also on the Internet (at www.extension.uiuc.edu/macon/agupdate/ or www.farmgate.uiuc.edu .) It is created weekly by former Extension Specialist Stu Ellis, who remains reachable at: shellis@uiuc.edu .
