January 14, 2011

US prepares for acres to be toughest ever

US crops battle for a bigger weighting in farmers' sowing plans as tight levels of farm commodity supplies have left it on course for one of its toughest ever "battle for acres".

The US Department of Agriculture left growers with even more of a mountain to climb than they had thought to replenish crop supplies when it on Wednesday (Jan 12) downgraded its estimates for domestic inventories of, in particular, corn and soy as of the end of 2010-11 to historically squeezed levels.

"The USDA's first major reports of 2011 added further pressure to already tight inventories," Rabobank said.

The thinness of the stocks makes it especially crucial for all crops to win favour with farmers in the US the world's biggest corn and soy growers, and major exporters in cotton and wheat too - for the spring planting season.

"We expect the battle for acres in coming months will be one of the fiercest in history," the bank added.

Such is the extent of competition that even the extra 3.6 million acres of winter wheat seeded last autumn are not secure.

"There is a possibility that some acres of planted winter wheat will be ploughed under to accommodate more profitable crops," Rabobank said, noting that USDA estimates for wheat supplies, while lower than analysts had expected, were relatively ample.

Furthermore, much of the hard red winter crop has, thanks to dry weather, got off to a miserable start.

In fact, if a forecast from Gerry Bange, the chairman of the USDA World Agricultural Outlook Board, this week is correct that US farmers will sow an extra 10 million acres this season, some winter wheat may need to be ripped out to ensure corn and soy sufficient are to rebuild supplies.

The huge demand for these crops makes it imperative to plant an extra 5 million to 6 million corn acres and 1 million to 2 million soy acres, Iowa-based broker US Commodities said.