An additional 9.8 million acres will be planted to crops in 2011, the largest year-over-year increase in planted acreage to the eight major crops in the U.S. since 1996, according to USDA Chief Economist Joe Glauber.
Here are the acreage levels that Glauber said USDA currently expects:
- Corn: 92.0 million, up 3.8 million acres
- Soybeans: 78.0 million, up 0.6 million acres
- Wheat: 57.0 million acres, up 3.4 million acres
- Cotton: 12.8 million acres, up 2.9 million acres
The level of area planted to the eight major crops at 255 million acres will be the highest total for these crops since 1998, Glauber said. "It will be a real challenge to get to the 10 million acres needed," Glauber said.
"Despite increased production of corn and soybeans, grain and oilseed markets are still forecast to be tight due to strong export demand and strong demand for biofuels," Glauber said. "Unless this year’s weather is better than normal or plantings increase more than expected, stock levels for corn and soybeans should see only modest rebuilding in 2011/12. This will likely mean continued volatility in those markets."
Despite an anticipated 4 percent increase in planted acreage, the corn market will continue to be tight in 2011/12. Assuming harvested acreage of 84.9 million acres and a trend yield of 161.7 bushels per acre, corn production for 2011/12 is forecast at a record 13.73 billion bushels. Because of this year’s smaller carryout, total supply for 2011/12 is estimated at 14.425 billion bushels, an increase of only 250 million bushels over 2010/11 levels.
Total corn use is projected at 13.56 billion bushels. Higher exports and higher corn use for ethanol will more than offset an anticipated reduction in feed use. Feed and residual use is anticipated to fall slightly in 2011/12 as high feed costs limit expansion in the pork and poultry sectors and beef feeding declines with tighter feeder cattle supplies. Exports, however, are anticipated to increase to 2 billion bushels as reduced global use of feed quality wheat boosts world corn trade and consumption.
With total supply at 14.425 billion bushels and total use at 13.56 billion bushels, ending stocks are projected at 865 million bushels in 2011/12, a modest 190-million bushel increase over the level projected for 2010/11 levels. Stocks-to-use levels will remain tight at 6.4 percent. Corn prices are forecast at a record $5.60 per bushel, $0.20 higher than the mid-point of the range forecast for 2010/11.
Higher than trend yields or larger planted area could help rebuild corn stocks, but stock levels are not likely to return to recent levels over the course of one or even two seasons. For example, if 2011/12 yields were to equal the record level of 164.7 bushels per acre achieved in 2009/10, ending stocks would exceed 1.1 billion bushels. And this assumes no increase in use for feeding, ethanol, or exports, an unlikely scenario. Further, assuming this yield and no increase in usage, 2011 planted area would have to increase 8 million acres to return stocks to the 2010/11 level of 1.7 billion bushels.
Soybean planted acreage is forecast at 78 million acres due to strong prices and increased double-cropping opportunities compared to last year. Assuming trend yields and harvested acreage of 77.1 million acres, production is estimated at 3.345 billion bushels. With a carryin of 140 million bushels and imports forecast at 15 million bushels, total supplies for 2011/12 are forecast at 3.5 billion bushels, about 5 million bushels more than total supplies for 2010/11.
Domestic use is estimated to be 1.765 billion bushels, unchanged from 2010/11. Exports, are forecast at 1.575 billion bushels, and, while down from this year’s record 1.59 billion bushels, would be the second largest on record. One out of every four soybean rows planted in the United States is currently exported to China and that is expected to continue in 2011/12 though U.S. exports will face renewed competition from South American exports from Brazil and Argentina.
Total use for 2011/12 is estimated to be 3.34 billion bushels, down 15 million bushels from the current year. Ending stocks are estimated to increase by 20 million bushels to 160 million bushels, the highest level of carryout since the 2007/08 marketing year. However, given the increased use since 2007/08, the stocks-to-use ratio is still estimated to be below 5 percent, indicating a tight market. The season average price is forecast to be $13.00 per bushel, a record.
Despite increased wheat plantings, total wheat production is expected to fall to 2.08 billion bushels in 2011/12. Higher abandonment rates in the southern plains will reduce harvested acreage to levels comparable to last year (47.5 million acres) and a return to trend yields (43.8 bushels per acre) will mean wheat production levels will fall about 6 percent from last year. With a lower carryin this year, total supplies are forecast at 3 billion bushels, down 9 percent from last year.
World wheat production is expected to rebound in 2011/12 which will reduce export opportunities. As a result, U.S. wheat exports are forecast at 1.15 billion bushels, down almost 12 percent from this year’s 1.3 billion bushels. With domestic food and feed use projected at similar levels to last year, ending stocks are forecast to fall to 663 million bushels. This would mean a stocks-to-use ratio of 28.3 percent, the lowest since 2007/08. The season average farm price is forecast at a record $7.50 per bushel, though prices will likely moderate in the late summer and fall as spring planted crops in the Northern Hemisphere come to market.
Total U.S. production of meat and poultry is forecast to remain flat in calendar year 2011, with slight growth forecast in supplies of pork and poultry but reduced supplies of beef. Stable production, increased exports and some recovery in domestic demand should help maintain livestock prices near last year’s historic highs. For livestock and poultry producers, increasing feed costs will be an important component of producer production decisions in the upcoming year.
In January, the price-feed cost ratios for cattle, broilers, hogs and milk, as reported by NASS, were all well below year ago levels. While livestock prices are expected to remain strong and further improvement in milk prices is likely in the months ahead, higher feed costs could lead to below average margins for livestock and dairy producers in 2011.
Here's a link to read Glauber's full remarks.