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USDA sets up battle for 2011 acres

Jeff Caldwell 11/09/2010 @ 7:38am Multimedia Editor for Agriculture.com and Successful Farming magazine.

There's a lot of demand for U.S. corn and soybeans, and not as much of either crop as earlier thought, setting up a battle for acres for 2011 that could last right up until the planters start rolling in the spring.

The U.S. corn and soybean crops are slightly smaller than federal officials anticipated a month ago, according to Tuesday's USDA-NASS Crop Production report.



The government pegged average yield at 154.3 bushels per acre, just down from last month's estimate of 155.8 bushels/acre, according to Tuesday's numbers. That's just below what analysts expected. That amounts to a 12.540-billion-bushel corn crop, down from last month's estimate of 12.664 billion.

For soybeans, USDA pegs this year's crop at 3.375 billion bushels, just down from October's estimate of 3.408 billion bushels. Soybean average yield is seen at 43.9 bushels per acre versus October's USDA guess of 44.4 bushels/acre.

USDA also released its monthly World Supply/Demand report Tuesday, which shows projected corn ending stocks for this year at 827 million bushels, the lowest level since the 1995/1996 marketing year. That tight figure, according to USDA, should alone give corn prices a 20-cent boost.

For soybeans, USDA trimmed this year's ending stocks by 80 million bushels from a month ago. That's mostly due to an increase in export demand, especially in China.

"Soybean exports are raised 50 million bushels to a record 1.57 billion due to increased global import demand and to a record sales pace, especially to China which accounts for over 70% of known U.S. soybean export sales through October," according to Tuesday's USDA Supply/Demand report.



These numbers amount to a continuation of a trend set earlier this fall, one that shows a clearly shrinking supply and growing demand, especially for U.S. corn, says Don Roose, market analyst with U.S. Commodities in West Des Moines, Iowa.

"We have a tight balance table on corn and beans. We know that we have big demand, so we'll have to buy corn acres. But, we'll have to have bean acres go up, too. We've lost our cushion," Roose said Tuesday morning. "We're working both sides of the demand table. We're in a commodity-friendly environment where the funds want to own corn. We have to reach price levels to slow down demand."

Further down the road, Roose says the concurrent run-up in demand for both corn and soybeans makes the battle for acres for the 2011 crops an even more "delicate balance.

"The fight for acres is going to be here all through the winter," he says. "Right now, it's more profitable to plant corn than soybeans, but we have to be careful not to plant too many acres now."

As it sets up now, though, farmers are optimistic they can raise both the corn and soybeans needed to satiate domestic and global demand. This fall's allowed most farmers to get their fall tillage and fertilizing done, and if conditions next fall continue to help farmers along, the acreage battle may be decided not long before the planters roll next spring.

"We can grow a huge crop next year. This fall has allowed great ground prep work," says Agriculture.com Marketing Talk member jec22. "A lot of ground can go either to corn or beans next spring after this fall. It will be just a matter of who is willing to pay the most come March and April."

 

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