February 21, 2011

 

US corn acres may top 90 million until 2013

 

 

US corn land, likely to top 90 million acres this year for only the second time since World War II, is seen to remain above that threshold up to at least 2013, fertiliser producer CF Industries Holdings Inc. (CF) said Friday (Feb 18).

 

The company reiterated a strong outlook for agriculture, which has lifted fertiliser producers in recent months. Farmers are being encouraged to plant more acres because of high commodity prices, and those high prices are in turn giving them more money to spend on fertiliser, Chief Executive Stephen Wilson said in a conference call to discuss fourth-quarter earnings.

 

CF Industries is forecasting farmers will plant 92 million acres of corn this year, up from 88.2 million a year ago.

 

Wilson added that even with strong yields, it will take more than one year to bring US corn supplies back to typical levels.

 

USDA projects corn supplies will tie a 15-year-low this year, a key reason why Chicago Board of Trade corn futures prices have doubled since June.

 

Wilson said he expects acreage to remain above 90 million in both 2012 and 2013.

 

US corn acreage shifted dramatically in 2007, to 93.5 million from 78.3 million. Prior to that, acreage had not exceeded 90 million since 1944, according to the USDA.

 

While higher corn prices typically prompt farmers to plant more acres, other commodities, including soy, wheat and cotton, have also soared, giving farmers other options. That has prompted some analysts to question whether the US has enough arable land to meet the demand.

 

Wilson said CF Industries' recent analysis indicates returns on corn planting at current prices are considerably higher than returns for soy.

 

"We think the stars and the planets are aligned to support corn planting," he said.

 

Corn is more dependent on fertiliser than other key crops.

 

For the latest quarter, CF posted a profit of US$200.3 million, or US$2.78 a share, up from US$51.4 million, or US$1.04 a share, a year earlier. The latest period had 46% more shares outstanding.

 

The results beat analyst expectations.

 

Net sales more than doubled to US$1.24 billion, as the company reported an extremely strong fall application season.

 

The company's stock was recently down 1.8% to US$145.18 a share.