Outlook

February 6, 2009

New-crop acreage less urgent

On the heels of the January reports, the case for acre wars is much weaker, says Jerry Gulke of Strategic Marketing Services in Chicago. "The January stocks report has a history of being a blockbuster, and this year was no exception. The trade was blindsided by corn usage being cut 316 million bushels and carryover increasing to 1.8 billion. Even though I talked about demand destruction, this was more than I expected."

Although soybean carry-out also was raised, it is not as burdensome, Gulke adds. "I'm thinking of going out and ordering all soybean seed now, and sidestepping a big fertilizer bill."

Gulke isn't alone in not locking in his seed early. U.S. corn and soybean acreage decisions were still a work in progress in mid-December, when Farm Journal Media polled growers. Roughly half had not yet finalized their plans, with about three-quarters of those on the fence saying they were waiting to see whether fertilizer prices fall and/or corn prices rise.

Perhaps the February crop insurance deadlines for much of the Corn Belt will push initial decisions ahead, Gulke says. —Linda H. Smith

Uphill battle for wheat

Unless the U.S. dollar does a quick nosedive or cash basis levels deteriorate significantly, the early 2009 futures price rally will only make U.S. wheat increasingly uncompetitive in world markets, says Don Riffe of Informa in Memphis. "The current supply/demand outlook is very different from a year ago, when higher prices were needed to ration usage. Current price levels and higher will be very difficult to sustain without a major production problem for the 2009/10 crop," he says. — Linda H. Smith

Fewer South Am beans

Last month, due to dry weather in key production areas, the crop estimating division of the Brazilian government (Conab) dropped its estimate of soybean production 1 million metric tons (mmt) to 52.3 mmt.

Likewise, Informa of Memphis reduced its Brazilian soybean production estimate 1 mmt to 59.5 mmt and reduced its estimates for Paraguay and Bolivia 300,000 metric tons each.