13-year High for Acres

March 11, 2011 11:32 PM

Expect to see more corn, soybeans, wheat, upland cotton, rice, sorghum, barley and oats planted this year. A whopping 9.8 million more acres is the latest estimate, the largest year-over-year increase in planted acreage to the eight major crops since 1998, said USDA Chief Economist Joe Glauber at the department’s annual Outlook Forum in late February. The grand total for the eight crops is 255 million acres.

Here’s how Glauber’s tallies stack up in the primary commodities:

Corn. USDA assumes a national average yield of 161.7 bu. per acre, putting production from 92 million acres at 13.73 billion bushels—a new record. Usage is forecast at 13.56 billion bushels, as exports and corn used for ethanol are expected to increase as well.

"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," Glauber said.

Ending stocks for the 2011/12 marketing year are estimated at 865 million bushels, up 190 million bushels from the February forecast for 2010/11 ending stocks. USDA expects corn prices to average $5.06 per bushel, which is 20¢ more than the February 2010/11 forecast.

In order to push carryover above 1.1 billion bushels, corn yields would need to reach 2009’s record of 164.7 bu. per acre. "That assumes no increase usage for feeding, ethanol or exports, an unlikely scenario," Glauber added.

China was a frequent topic of discussion at the Outlook Forum. USDA analysts said "China’s potential to import corn remains unknown. It will be dependent on domestic production, relative prices and internal policies."

Soybeans. Planted acreage is forecast at 78 million acres due to strong prices and an increase in double cropping. Assuming a trendline yield for soybeans, total production should be 3.345 billion bushels. Domestic use is estimated at 1.765 billion bushels, unchanged from 2010/11, while exports are tallied at 1.575 billion bushels.

USDA expects soybean carryover for 2011/12 will end up at 160 million bushels, the highest since 2007/08. "Given the increased use since 2007/08, the stocks-to-use ratio is still estimated to be below 5%, indicating a tight market," Glauber added.

As for prices, USDA expects soybean producers will receive a record $13 per bushel.

Wheat. Despite an increase in wheat plantings to 57 million acres, total wheat production is expected to fall to 2.08 billion bushels because higher abandonment rates in the Southern Plains will reduce harvested acreage to levels comparable with this past year (47.5 million acres). A return to trend yields (43.8 bu. per acre) would mean wheat production levels will fall about 6% from this past year.

Global wheat production is expected to increase, which will translate into lower U.S. wheat exports—down 12%. Carryover is pegged at 663 million bushels and the average farm price at $7.50 per bushel.

Cotton. With cotton acreage at 12.8 million and yields at 810 lb. per acre, the U.S. should produce 19.5 million bales of cotton in 2011. Add in usage assumptions and cotton carryover should climb to 2.9 million bales. The cotton average price is forecast at $1.10 per pound, exceeding the 2010/11 price by 35%.

Livestock. Total U.S. production of meat and poultry is forecast to remain overall flat in 2011, with slight growth in pork and poultry supplies but reduced supplies of beef. Stable production, increased exports and some recovery in domestic demand should help maintain livestock prices near 2010’s historic highs.

The price-to-feed cost ratios in January for cattle, broilers, hogs and milk, as reported by the National Agricultural Statistics Service, 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," Glauber said.

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