When the January crop production and World Agricultural Supply and Demand Estimates (WADSE) reports were released, U.S. Farm Report conducted a Twitter poll to see how, if at all, farmers would adjust their planting intentions for the spring after corn yielded a record high 176.1 bushels per acre.
Of the 463 people who responded, 42 percent said they would stick with a 50/50 rotation of corn and soybeans, while 18 percent said they would replace corn with a different crop.
Doug Werling, vice president of trading at Bower Trading, Inc., thinks farmers outside of the Corn Belt will start to diversify, possibly into sorghum or cotton. Cotton, he said, is going to be a “phenomenal growth point” for farmers that can expand.
“It’s not just going to be this corn, bean,” he said on U.S. Farm Report. “There’s going to be all these other mix outside the Corn Belt that I think may surprise. They’ll be other things we’ll be diversifying into.”
Garret Toay of AgTraderTalk thinks this move could stop the flow into corn and soybeans, citing the winter wheat acreage reduction going into 2017. During the January 2017 report, roughly 1 million acres were thought to have gone to corn and soybeans, and he doesn’t think that will be the case this year, especially with foreign demand for cotton and sorghum.
“China’s after the sorghum because it’s non-GMO—they don’t need TRQs,” he said. “They’re importing huge amounts of sorghum. The biggest question that you’ve got right now is where are these 90 million acres of beans we had last year, where they’re going to go.”
Aside from one of the main market indicators—weather—and how it will impact the market dynamic in 2018, Werling is watching more broad-based commodities.
“2017 proved that there’s enough demand under these markets when you have really good crops to support prices, and 2018 will be a very good opportunistic opportunity for commodities in general,” said Werling.
Since the dollar has a lower value, there will be money flowing into these markets because “they have value.”
“The equity markets, you’re going to see a lot of that money start coming into commodities,” he said. “Which is longer term promising for price support and price appreciation outside of fundamentals.”
On the other hand, Toay isn’t certain if that will be sustainable moving forward because of the large carryout in both corn and soybeans.
“The U.S. should be shipping better corn exports than what we should have been,” he said. “Brazil isn’t shipping as much corn as they are…so that grain is sitting down there and waiting for an opportunity like we are as a residual supplier here in the U.S.”
Watch the full roundtable discussion on U.S. Farm Report above.