March 2, 2011
Early Look at 2011 U.S. Growing Season
Since the calendar has turned to March, let's take an early look at the 2011 U.S. growing season. The battle lines for U.S. crop acreage keep shifting due to the extreme price volatility of recent weeks, but in general, the crop that has won the battle thus far is cotton followed by corn and then soybeans. The heightened interest in cotton was evident at the recent Agricultural Outlook Conference in Washington where any session dealing with cotton drew overflow crowds of interested participants.
The USDA is estimating that there will be a little more than nine million new acres of crop production for the 2011 U.S. growing season. They stated that acres will come from a number of sources including: reductions in minor crops such as oats, barley, and rye, reduced rice acreage in the Delta, increased double crop soybean acreage, the conversion of some hay and pasture acres to row crop production, the use of some CRP land for row crops, and some idle acres coming back into row crop production. The reality is that high prices buy acres, and that is especially true in the case of cotton with all time record high prices although I think the USDA is a bit optimistic on the total number of new acres. It is estimated that American farmers may plant 92-93 million acres of corn and 78-79 million acres of soybeans, but the final figure won't be known until the June Planting Report. Until then, its best to look at the big picture and it appears that the winners in the battle for acres will be cotton and corn.
Between now and when the planters start to roll, farmers will be keeping one eye on the weather and the other eye on the markets.
Spring weather 2011 - In addition for the battle for acres, the springtime weather in the U.S. will be watched closely by farmers. USDA meteorologists are expecting a cooler and wetter spring in the upper Midwest and a warmer and dryer spring in the southern U.S. The cool and wet conditions could also extend northward into the prairie provinces of Canada as well. One thing is for sure, with the amount of snow cover across the northern part of the country, spring time flooding is almost a certainty in the Dakotas and Minnesota.
Even though it appears that corn is winning the battle for acres compared to soybeans, the weather during April will be the deciding factor. Generally, it is assumed that warmer and dryer conditions during April favors corn acres and cooler and wetter conditions during April favors soybean acres.
Spring markets 2011 - One of the recurring themes during the conference was the tight balance sheets for corn, soybeans, and cotton. The recent volatility in the market is a reflection of just how nervous the market is at these price levels and it shows no signs of abating any time soon. With the tightness of the world balance sheets for all the major crops, we cannot afford even minor disruptions in the 2011 production across the entire northern hemisphere. The market will remain very nervous until we have a better handle on U.S. production sometime in mid-summer.