As corn and soybean cash prices flutter around their post-harvest highs, a farmer telephones with a question: how do February’s stronger prices compare to 2010 season average prices for corn, soybeans, wheat and cotton?
Well, let’s see. According to U.S. Department of Agriculture data, the national average cash price for 2010 corn was $6.38 per bushel, soybeans averaged $12.97, Kansas City wheat clocked in at $7.55 and cotton at a plump $1.40 per hundredweight.
Not surprisingly, 2010 average futures prices were stronger, according to numbers compiled by Bloomberg News. Chicago corn, for example, averaged $6.79 per bu. in 2010, “the highest ever and twice the level of the previous decade.”
Likewise, the news service continues, soybeans averaged “a record $13.21, 72 percent above the 10 previous years, while wheat’s average of $7.24 was the second-highest ever and 57 percent more than the past decade.”
We like those numbers for no other reason than if 2010 prices are, as some suggest, the “new normal,” there’s everything new and nothing normal about any of them.
Moreover, they make an interesting yardstick to measure today’s prices which, for corn and soybeans — $6.20 or so and $12.50 in central Illinois — aren’t too shabby by comparison.
These tall numbers draw us to another set of even taller numbers: anticipated 2012 planted acreage. For example, one early February poll estimated 2012 corn acres at 94.3 million, the most since 1944, beans at 75.3 million and wheat at 57.2 million. The total for the three, according to the poll, is a staggering 226.8 million, the most since 1984.
Total production, assuming good weather, would be equally staggering: nearly 14 billion bu. for corn, 3.3 billion bu. for beans and more than two billion for wheat.
The increased 2012 acres are coming from two chief sources: those not planted, washed out or fried by last year’s rain, floods and droughts; and long-fallow, now-getting-planted Conservation Reserve Program acres.
While you can’t change the weather, Congress changed the CRP in the about-to-expire 2008 farm bill. Those changes and today’s sky-high grain prices have drawn nearly five million acres from the program in the last three years.
An even bigger amount comes this fall when contracts on a whopping 6.5 million CRP acres expire. How many will not renew? Hard to say, but as DTN reported in January, nearly 75 percent of those expiring acres, or 4.85 million, are in “states (that) suffered major federal disaster declarations in 2011.”
Starting to figure out why most commodity groups are pushing to expand today’s already generous federal crop insurance programs to cover nearly every production and market risk, and maybe the farm’s lilac bush, in the 2012 farm bill?
On the crop insurance front, here are two more numbers that reveal its large presence in today’s federal farm policy:
- Despite 2011 crop and livestock sales that totalled $363 billion, which is a record, and net farm income of $99.1 billion, which is another record, crop insurers paid at least $9.1 billion in claims, which itself is a record.
- According to February estimates released by the Congressional Budget Office, the cumulative cost of federal crop insurance is forecast to be $89 billion over the next 10 years, which is one-third more than the $65 billion that the CBO reckons all USDA conservation programs will cost over the same period.
The White House has its own number for federal crop insurance — it suggests the heavily subsidized program be given a $7.6 billion haircut over the coming decade.
We’d give you hard numbers on the long odds of that happening, but it’s just easier to say that pigs will fly first.
Alan Guebert is an agricultural columnist based in Illinois.