Western Producer reporter Sean Pratt recently attended a gathering of American wheat, corn and soybean growers in Florida and filed these reports.
TAMPA, Fla. – The soybean industry is taking it on the chin as the three main U.S. commodity groups duke it out in a 2007 turf fight.
In its March 2 grain and oilseeds outlook, the U.S. Department of Agriculture forecast 87 million acres of corn, which would be the largest number of acres planted to that crop since 1946.
If the USDA’s forecast proves correct, it would be an 8.7 million acre or 11 percent increase in corn plantings over last year, making corn the uncontested heavyweight champion of American agriculture.
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Ken McCauley, president of the National Corn Growers Association, thinks that is a conservative number. He feels the increase could be in the neighbourhood of 10 million acres. Allendale, a large U.S. brokerage firm, is forecasting a 12.5 million acre increase.
While industry observers disagree over the magnitude of corn’s pending victory, there is little doubt where the acres will come from.
“The projected increase in corn planting is largely expected to result from a shift away from soybean planting, particularly in the corn belt, where more corn-on-corn plantings are expected,” said the USDA report.
The department expects a five million acre decrease from last year’s record soybean crop. McCauley thinks the number will be higher than that.
A significant decline in soybean plantings would increase prices for that crop and be equally bullish for Canadian canola, which takes its cues from soybeans.
But according to Rick Ostlie, president of the American Soybean Association, the decrease won’t be as dramatic as analysts are suggesting. He anticipated a drop of three to four million acres and thinks it will be a short-lived downturn.
“After one year or so I think the acres will be back up. I’m not concerned,” he said during an interview at the 2007 Commodity Classic conference in Tampa, Florida, a gathering of U.S. corn, soybean and wheat groups.
The main reason for his optimism is rapidly rising fertilizer prices in the United States. Nitrogen prices have shot up 61 percent in the last five months and are showing no signs of abating.
As of March 1, granular urea, a popular form of nitrogen fertilizer, was selling for $353.75 US per short ton f.o.b. New Orleans, Louisiana, up from $219.50 on Oct. 5, 2006, according to International Raw Materials Ltd., a company that tracks fertilizer prices. IRM said traders are talking about prices hitting $400 per short ton this spring based on rampant corn and wheat prices.
At that rate corn growers will be facing fertilizer costs of $70 to $100 per acre next year, said Ostlie. He thinks soybeans, which are nowhere near as nitrogen-dependent as corn, will regain acres this spring when farmers pull out their calculators.
“We’re going to have a small decrease but not a major decrease,” he said.
The USDA report also included a caveat that the soybean decrease may be less than the five million acres it is forecasting.
“With new-crop soybean futures exceeding $8 per bushel, the total reduction for soybean acreage may be moderated as producers in the Northern Plains find its potential returns more competitive within that region’s crop rotations.”
Wheat, the third major commodity crop, is forecast at 60 million acres in the USDA report, up 2.7 million acres from 2006 levels. High prices last fall boosted winter wheat plantings by 3.5 million acres.
“Gains in winter wheat will be partially offset by lower spring wheat plantings given strong prices for competing crops in the northern Plains,” stated the report.
Daren Coppock, chief executive officer of the National Association of Wheat Growers, said winter wheat has been planted in a lot of ground that hasn’t seen the crop for a long time. However, with corn prices recently hitting a 10 year high, he has heard of farmers pulling wheat out of irrigated acres and planting corn.
“We’re in really intense acreage competition between the major crops,” he said.
