Acreage Battle Just Beginning, Says Farm Futures Survey
Good prices for all crops make farmers reluctant to change historic rotations.
Compiled by staff
Published: Jan 4, 2011
ST. LOUIS – A global boom in commodities gives farmers plenty of choices as they finalize planting choices for 2011. But the latest Farm Futures survey shows long-term agronomic concerns may outweigh "the invisible hand of the market" when all is said and done this spring.
Farm Futures second producer survey put 2011 corn plantings at 89.93 million acres, up almost 2% from USDA's last projection of 2010 acreage. But the latest Farm Futures estimate for 2011 was only slightly higher than the magazine's first survey in July, which came in at 89.5 million, despite rally of more than $1.50 a bushel.
The magazine put 2011 soybean plantings at 77.42 million. That would be down a little compared to USDA's current estimate of 2010 acreage, though the survey also showed farmers planted fewer soybeans last year than previous estimates.
The magazine found farmers planted more winter wheat last fall than its first estimate, part of a big potential rebound for the crop. Farm Futures puts winter wheat seedings at 42.37 million acres, up 13.5% from 2010 and about 600,000 more than its first survey last summer. Farmers also plan to put in more spring wheat and durum, with total wheat seedings reaching 59.22 million, compared to USDA's last 2010 estimate of 53.6 million. The latest totals are even bigger than the magazine found in its first survey last summer.
Results of the survey were released today at the opening day of the Farm Futures Management Summit in St. Louis. USDA reports its first estimate of winter wheat seedings Jan. 12, but won't report planting intentions until March 31. Farm Futures surveyed more than 1,000 growers by email from Dec. 1 to Dec. 29.
Farm Futures also surveyed growers about 2010 corn and soybean production. Based on that data the magazine puts 2010 corn production at 12.406 billion bushels on yields of 153.2 bpa, down from USDA's last estimate of 12.540 billion. For soybeans, Farm Futures estimates production at 3.392 billion bushels on yields of 44.6 bpa, up 17 million bushels from USDA's last estimate.
"With net farm income up some 30%, farmers are once again very optimistic as 2011 begins," notes Farm Futures Senior Editor Bryce Knorr, who conducted the survey. "Prices for major crops are trading at the highest levels since the run to record values in 2008, enjoying big year-end rallies. As a result, farmers appear to be reluctant to make major adjustments to their well-established cropping patterns. Instead, they stand ready to use this unique window of profitability to return their fields to historic rotations."
"Some 60% of the growers we surveyed said they would not consider changing rotations under any price scenarios to plant more corn or soybeans. While corn offers better projected profitability per acre for many Midwest farmers, high costs and volatile basis in the cash markets are causing many to step back from the type of big changes we saw during the previous bull market of 2006 to 2008. It's another form of risk management that also has long-term benefits for the health of their fields."
At the same time soybeans are also likely losing ground in the South due to record high cotton markets that are helping fiber plantings recover.
Knorr said the big jump in winter wheat acreage was made possible by strong wheat prices last summer caused by the disastrous Russian drought. With corn and soybeans much weaker at that time, farmers took advantage of the wheat rally to seed more ground to wheat after plantings nose-dived due to weather problems and weak prices the year before.
Despite the big jump in seedings, the wheat rally may not be over, says Farm Futures Market Analyst Arlan Suderman.
"Clearly, wheat's work in the marketplace isn't over," says Suderman. "Up to one-third of the winter wheat crop slipped into dormancy poorly established. That wheat could easily be abandoned in favor of planting a more appealing spring crop if prices provide the necessary incentive in March and April."
"The other thing that stands out to me: Current producer intentions leave little margin for error and necessitate high yields for corn, soybeans and wheat in2011. Long-range forecasts currently raise the risk of dryness remaining a problem for the Plains well into the spring, which would threaten wheat yields. Forecasters see good planting and growing conditions for the Midwest at this early date, but the risk would be if Plains dryness would migrate east into the western Midwest. These acreage estimates provide no buffer for a weather-induced risk."
Permalink: Click here
Tagged: wheat, farm, farm futures, usda, soybeans
|