October 29, 2010

 

US corn acreage for 2010 to hike to 90 million acres

Area planted with corn could rise from 88.2 million to past 90 million acres this year as US fertiliser prices have doubled over 2009, with a quarter of the gains coming in the last three months.

 

This speculation is due to farmers having increased fertiliser orders, coupled with corn prices hovering around two-year highs near US$6 per bushel, trade sources said.

 

"We're in an unusual situation. We're about 60 days short of supply and 30 days ahead on fertiliser demand. We won't have tonnage figures until January but I can tell you that the demand is up because of the early harvest and the higher corn prices," said Jean Payne, president of the Illinois Fertilizer and Chemical Association, Bloomington, Illinois. She based her assessment of demand on anecdotal accounts from farmers in Illinois.

 

Corn at the CBOT have surged more than 40% from a year ago and about 80% above the summer low. This has fueled expectations for increased corn seedings next year, and the rise in fertiliser demand provides evidence that will happen.

 

In a sign of rising demand from farmers, the cost of anhydrous ammonia (NH3), the main source of nitrogen for corn growers, has doubled in some parts of the US Midwest from around US$400 per tonne a year ago to US$800.

 

Payne said the price of anhydrous ammonia probably will rise further because the big surge in demand will come once soil temperatures drop to 50 degrees Fahrenheit, (10 degrees Celsius), when anhydrous ammonia converts to nitrate.

 

"There is no doubt the price of anhydrous is going up. I booked some for US$545, up from last year's US$415 and now the price in central Illinois is from US$610 to US$675," said Dan Cekander, Newedge USA analyst and operator of a family farm.

 

"I can't rule out that it could be priced at US$800 in some areas, it is going up. For comparison I booked at US$990 in the fall of 2008 for the 2009 crop and it eventually went up to US$1,200 and US$1,300," Cekander said.

 

Harry Vroomen, vice president of economic services with The Fertilizer Institute in Washington, said higher corn prices were leading to increased application of fertilisers.

 

"The higher crop prices should lead to a six to eight million-acre increase in the number of planted acres of corn, soybeans, wheat and cotton in 2011. These crops typically account for 70% of total US nutrient use," he said. He said about 45% of all fertiliser is applied in the fall and 55% in the spring.

 

The projected increase in planted area would equate to about a rise of 2.5%-3.5% over the combined 230.5 million acres planted in 2010, according to USDA data.

 

In 2009, a year of lower prices, phosphorous consumption in the US was down to around 3-1/2 million tonnes from the usual 4-1/2 million, potash use dropped to three million tonnes from about five million and nitrogen was around 12 million tonnes down from the usual 12-1/2 to 13 million.