' /> Chip's Chore Time | Dairy Today

Sep 22, 2014
Home| Tools| Events| Blogs| Discussions| Sign UpLogin

December 2010 Archive for Chip's Chore Time

RSS By: Chip Flory, Pro Farmer

Chore time for me isn't what it used to be when I was growing up on our eastern Iowa farm. In fact... I don't even have horse chores to do any more!

Will acreage battle really develop?

Dec 20, 2010

Chip Flory


Chore time for me isn't what it used to be when I was growing up on our eastern Iowa farm. In fact, I don't even have horse chores to do anymore! My daughter is off to college, and instead of buying hay for another long winter, the horses are gone. (Seems like an excellent "trade" to me!!)

I was thinking…

... about what the markets will "look like" as we head into 2011.

New-crop corn, soybean, wheat and cotton futures are withing striking distance of 2010 highs as we wrap another year... but none of these markets feel like they've exhausted their upside potential.

Corn: The industry needs about 5 million more acres planted to corn than were planted in 2010. That would put total plantings around 93 million acres. As Informa Economics, Inc., showed last week, the market has not yet purchased that many acres. In fact, the Informa survey showed the potential for an increase in acres of about half that much. The real incentive to increase acres will come in February -- when the guaranteed price for crop revenue coverage is established. If we look back at the wheat market's rally in August (when the CRC price for wheat was established) for an indication of what might happen in February, we should expect the rally to continue. It hasn't taken the markets long to figure out the best time to encourage (or discourage) plantings is when the CRC price is established. Bottom line -- expect some fireworks in corn (and soybeans) in February.

Soybeans: The bean market needs to hold onto "just enough" acres from 2010 to assure adequate supplies for the 2011-12 marketing year. So far, it seems the market is doing just that. Acres will very likely be down, but Informa's latest survey reportedly showed acres will be close to steady -- down just 0.2% from 2010. The "tighter" soybeans hold to 2010 acres, the tougher it will be for corn to get all the acres it needs for 2011. That's why expectations for an acreage battle are still very high.

Wheat: Plenty of reasons behind the strength in the wheat market, but Russia's export ban is probably the number one factor that drove wheat prices up at a critical time of the year to encourage even more seedings for 2011 harvest. And now with crop problems in Australia and dry conditions in U.S. HRW country, the market still has plenty of upside potential. Perhaps most importantly, the wheat market won't likely be an anchor on corn or soybeans if (when?) the acreage battle hits high gear.

Cotton: There's been a lot of speculation that cotton acres will be up -- and up big -- in 2011. The Informa survey reportedly showed acres up abotu 18% from 2010 (which qualifies as a "big" increase, in my book). Still... that increase may not be "locked in." Most of the expansion will come from current cotton growers, which limits the availability of acres. "New" (or returning) cotton growers are hard to find due to the cost of getting into (or back into) cotton production. And... if we do see new (or returning) cotton producers in 2011, they'll likely stick with cotton for a few years to pay for some very specific production equipment.

So... where to from here? Corn acres will be up from 2010, but probably not enough to turn the market negative. Bean acres will be down from 2010, but probably not enough to turn the bean market "explosive." Wheat acres are up, but not as much as many feared... and cotton acres will be up, but not enough to "wreck" the market. Of course... that's strictly a "guess" based on current market conditions. And it's in anticipation of an acreage battle in early 2011 attracting more acres to corn (away from soybeans).


Log In or Sign Up to comment


Receive the latest news, information and commentary customized for you. Sign up to receive Dairy Today's eUpdate today!

The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions