It is getting to the point where it seems assured that South America will produce record crops.
Crop stages are reaching the point where weather events have a declining impact on yield.
So market attention is shifting northward to the coming American crop.
The continuing drought in the Plains and Midwest is becoming more worrisome as we get closer to seeding.
Looking at the price relationship between new crop corn and soybeans finds that the economic balance is clearly in favour of corn.
This week’s story by Robert Arnason delves deeper into the corn seeding outlook, but in this column let’s focus on acreage.
The influential analytics firm Informa Economics last week raised its forecast for 2013 U.S. corn area to 99.3 million acres from 99.03 million in a previous forecast.
That would be an increase of 2.15 million acres over last year’s crop.
If American farmers top 99 million acres of corn, it would be the largest seeded area since the Depression year of 1936.
That would represent a remarkable comeback for a crop that had plunged to less than 65 million acres in 1969. There simply was not enough demand for America’s productive capacity and prices were low. This was just before Russia began making big wheat purchases.
Also, new soybean varieties were starting to become attractive alternatives in the 1960s and 1970s.
Corn bounced back in the 1980s, but continued competition from soybeans meant it never climbed much above the 80 million acre mark. But then the ethanol boom began to drive corn prices high and improved varieties lifted yields, which attracted acres back to the crop.
Acreage has climbed back to the level of the 1930s, but modern production is light years ahead of what farmers could produce back then.
In 1936, yield potential was a fraction of what it is today and to top it off bad weather slashed the yield 23 percent from the previous year.
Yield was a paltry 18.6 bushels an acre and production totalled only 1.26 billion bu.
That same acreage will likely produce more than 14.5 billion bu. in the coming crop year.
While we are looking at statistics, here are some on China’s oilseed demand. It shows that although soybeans dominate the trade, demand for canola last year grew much faster than for soybeans.
Data from China shows its imports of Canadian canola seed in calendar year 2012 totalled 2.93 million tonnes, an increase of 134 percent over the previous year.
Canola oil imports from Canada were 1.32 million tonnes, an increase of 113 percent.
Canola meal imports from Canada were 314,087 tonnes, down 56 percent from the previous year.
China imported 58.4 million tonnes of soybeans, an increase of 11 percent.
Of that, 44 percent came from the United States, 41 percent from Brazil, 10 percent from Argentina and three percent from Uruguay.
China imported 1.83 million tonnes of soy oil, an increase of about 60 percent.
Of that, 50 percent came from Brazil, 38 percent came from Argentina and 11 percent from the U.S.
China also imported 6.34 million tonnes of palm oil from Malaysia and Indonesia, an increase of 7.26 percent.
