USDA planting report —
Even if U.S. corn acres grow in 2011 and even if the U.S. harvest hits an average yield of 162 bushels per acre, the country is still looking at a short crop.
The same story is reflected for soybeans as determined by the U.S. Department of Agriculture’s planting intentions report released Thursday morning.
With both commodities’ ending stocks expected to drop lower than they already are by August 2012, corn hit its 30-cent limit up Thursday when markets opened and was expected to possibly reach a 45-cent limit on Friday.
The report noted that intended corn acres would grow from 88.2 million acres in 2010 to 92.2 million acres this spring. Soybean acres could tally 76.6 millions acres across the U.S., down 1 percent from last year.
Darin Newsome, DTN senior analyst, said the corn number was slightly higher than expected and the soybean total was less than expected.
“It’s not enough,” Newsome said about intended corn planting, “to rebuild stocks.”
If the U.S. averages its 20-year average trend, ending stocks would drop to 525 million bushels by August 2012, the tightest ending stocks on record. Weather will be a crucial factor in determining harvested bushels.
According to Newsome it would take 93.5 million acres (at 162 bushels per acre) to get ending stocks over a more comfortable 1 billion bushel mark “and I just don’t see that happening.”
Concerning soybeans, the report projected a national yield of 43.4 bushels per acre, producing 3.28 billion bushels. But demand is also estimated to be 3.33 billion bushels draining the ending stocks to 101 million bushels by August 2012 – a record low for ending stocks.
“And we just can’t go below the 100 million bushels,” Newsome said.
Newsome then cautioned that growers and marketers should keep in mind that these are just potential numbers.
“Planting hasn’t happened yet,” he said. “Actual plantings will change.”
The tight ending stocks is dependent on an ideal growing season across the nation, Newsome said. But the outlook for spring is anything but ideal.
Northern Iowa is looking at a cooler-than-normal spring with enhanced precipitation “that will keep planters and tractors out of the fields,” Newsome said. Most of extreme Southern Iowa is hunkered down for a stormy spring.
Only acres in extreme Southwest Iowa are expecting to bask in seasonable temperatures.
Looking at flood risks, all of Iowa has above-average chances of flooding, with extreme Northwest Iowa and counties along the Mississippi River having high chances for flooding this spring.
Demand destruction looming?
According to Chad Hart, an Iowa State University grain marketing specialist, the protracted tight ending stocks is capable of “demand destruction,” or rationing. “Somebody has to blink and nobody is yet.”
Such rationing could lead to less livestock being fed. “Herd size shifts to meet feed costs,” he said. Some producers could look at alternative grains for feeds, he noted, but those commodities are rising higher as well.
Hart doubts the U.S. corn yield average will reach 162 bushels as USDA projects. He said most of the new corn acres are in North and South Dakota “and they just won’t yield as much” as the rest of the Corn Belt.
He said in Iowa, intended corn planting is generally higher than what actually goes into the ground and soybean acres tend to go higher than expected.
“We plant corn until Mother Nature says we can’t and then we make the switch over to soybeans,” Hart said.
According to Russ Havens, president of the Iowa Cattlemen’s Association, there is no sign of wide-scale rationing among cattle feeders so far. “Herd sizes have been dropping for a number of reasons, but there is no rationing.”
He said producers are watching their inputs closely and opting to feed more distiller’s dried grain.
“Feedings DDGs is still an advantage in Iowa,” he said.
Contact Larry Kershner at (515) 573-2141 Ext. 453 or at email@example.com.
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