My Thoghts on 2013 Acreage and Production
Oct 18, 2012
Informa is scheduled to issue an update to its 2013 acreage estimates this Friday at 10:30am CST. I believe these numbers could prove to be vitally important to the trade, as they will provide the blueprint and framework for US crop production next season. My guess is corn acres will be close to 95 million once we are all said and done, even though there should be a much larger quantity of wheat and soybean acres. A lot of analyst are predicting a reduction in corn acres down to 93 million because of the increased soy and wheat acres, sorry I just don't see it or hear it from talking to producers across the country. There is no debating the fact that higher prices have pulled more acreage into production. Sure the corn-on-corn guys are talking about going to a more traditional rotation, and the guys in Missouri and a few other areas are talking about double cropping wheat followed by soybeans, but the guys up north in the Dakota's, Wisconsin, Minnesota, etc... are having a terrific run and will continue to plant more corn acres. What about the producers down South who are going to plant fewer cotton acres in order to plant more corn and soybeans. Yes, I also believe we will see close to a 20% jump in total SRW acres as well. Bottom-line, total planted acreage is going higher!
Production acres, in my opinion, will also be going higher globally as well. The huge windfall of money being generated by producers globally is prompting more and more acreage to be cleared and put into production. As the old adage goes, "there is no better cure for higher prices, than higher prices..." The most frustrating part of it all is that we taught producers in parts of South America, Ukraine, Russia, Australia, Mexico, etc... how to produce better yields, how to grow and harvest bigger crops. We also showed them how to best market and export their production, now all of a sudden we have more and more of our own clients knocking on their doors for supply. We can't say that we didn't see it coming. Do you realize for the first time ever Brazil’s 2012/13 crop should put their country in the lead for soybean production and exporting!
I am not getting "bearish" as of yet but I have reduced my corn and wheat ratings to "neutral" and soybeans down to a level "1" bullish rating for the time being. We have to listen to the market, and right now there is a terrific demand story still alive in soybeans, but supplies both here at home and abroad seem to be getting larger, at least in the trades eyes. I am not giving up hope on a weather story out of South America because there is still a ton of time, I am just limiting the amount of my wager. The trade is stuck on the fact that US soybean yields have gone from what many analyst and producers were thinking would be 32-35 bushel per acre average up to 38-40 bushel per acre average US soy yield. Lets not forget the trade is also thinking South American soy production could go from around 115MMT's last year to over 150MMT's this year baring any major weather setbacks or complications. Which in my opinion could be a tall task. Nonetheless, the markets are content on playing the weather as "near perfect" until notified otherwise.
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