April 2, 2012

 

US corn production hits 75-year high

 

 

US farmers will plant the most corn in 75 years to cash in on the high prices, after corn prices reached a record high last year on strong demand that drained supplies, according to a US government report.

 

If USDA's projection holds, it will be the most corn planted since 1937 when 97.2 million acres were planted.

 

The increase in plantings should boost supplies, which have been forecast to drop to the lowest level since the mid-1990s by the end of the crop's marketing year in September. The US corn stockpile was down 8% from a year ago, with consumption running faster than traders expected.

 

The dramatic expansion raised hopes that the next harvest would ease tight supplies that have kept corn prices near historic highs.

 

Corn, wheat and soy futures rose strongly on the news. Corn for delivery in May was up by US$0.40 a bushel, the maximum allowed in a day, or 6.6%, to US$46.44 a bushel at midday. Soy was up 4% and wheat was up nearly 8%.

 

USDA estimates growers will plant the largest area to the eight major field crops-corn, wheat, rice, cotton, soy, sorghum, barley and oats-since 1998 and up 2% from 2011.

 

In USDA's annual prospective plantings survey, farmers said they aimed for record amounts of corn in Iowa, Minnesota, North Dakota, South Dakota and Idaho. Across the US, the plantings outlook was up 4% from last year and above analysts' expectation of 94.72 million acres.

 

In Iowa, the top corn state, corn planting would be up by 4% while soy drops 6%. Nebraska, no.3 state in corn production, would expand corn area by 5% while trimming soy by 4% and wheat by 11%. Illinois, which is the no.2 state in corn and soy production, would boost soy area by 100,000 acres, or 1%, while cutting corn by 1%.

 

"Acreage is expected to shift to corn," the USDA said. In many state, corn offers higher returns than competing crops.

 

Soy plantings were projected to fall 1% from last year to 73.9 million acres, increasing concerns about tightening global supplies of the oilseed due to poor harvests in South America. Analysts had expected soy plantings to increase to 75.393 million acres.

 

USDA estimated farmers will plant 12 million acres of spring wheat other than durum, with a record low number of acres seeded in South Dakota. That is down 3% from last year and below the average trade estimate of 13.313 million acres.

 

USDA's projection for a total wheat planted area of 55.9 million acres was up 3% from 2011 but below the average analyst estimate of 57.422 million acres.

 

Growers intended to plant 13.2 million acres of cotton, down 11% from last year, and 2.56 million acres of rice, down 5%, according to the USDA report.

 

With normal weather and yields, the corn harvest would be a record 14.5 billion bushels, up 10% from the mark set in 2009, according to Reuter's calculations. Soy would total 3.2 billion bushels, the fourth largest on record. The wheat harvest would be 2.1 billion bushels and cotton growers would pick 18 million bales.

 

Soy stocks were estimated by USDA at 1.372 billion bushels, up 10% from 2011 but 1% smaller than traders expected. Some 994 billion bushels were consumed since Dec. 1.

 

Wheat stocks totalled 1.201 billion bushels, according to USDA, down 16% from 2011 and 2% less than traders expected.

 

The farm sector is enjoying a boom that dates from 2006 as food demand rose worldwide and biofuels spurred crop production. With record high farm income, farmers have updated their tillage equipment and built more storage bins. Companies that would have benefitted include equipment makers Deere and AGCO, seed companies Monsanto Co, bin manufacturers Brock Grain Systems and processors such as Archer-Daniels-Midland Co.