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2011 Acreage Battle Intensifies

January 22, 2011

 

The looming 2011 acreage battle just got a lot more contentious. Informa Economics on Friday released its expectations for this year’s corn and soybean acreage and the big surprise was that neither crop is expected to have as many as originally thought.
 
With already-tight supplies of both commodities, prices has been rapidly ascending in recent months. The news that Informa anticipates 2011 corn acres to total 90.903 million acres and soybeans at 76.654 million acres sent new crop contracts higher, says Jerry Gulke, president of the Gulke Group. That corn number, if correct, represents 2.7 million more acres than was planted in 2010.
 
"What the market has understood for quite a while is that we have to get old crop high enough to curb demand. So they bought the old and sold the new, thinking if it gets high enough we won’t need the acres."
 
News of China backing out of corn purchases from Argentina sent the markets lower on Thursday. This is largely in reaction to what Gulke says is a natural reaction in a strong bull market. There will be down days for sure, but the fundamentals that brought on this price upswing are still in effect.
"The market is looking for any negative news it can find right now. You have to take a step back and look at the long term trend and say where have we been since the middle of June. The long term uptrend is still intact. We get away from it, but the market wants to gravitate back. Corn and beans have been on the uptrend in a steady fashion, with a lot of volatility along the way."
 
The big winner in the acreage battle this year, according to Informa’s release is cotton. The king crop of the south is expected to regain its crown this year with 2.25 million more acres than was produced in 2010.

 

 

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