July 22, 2012

 

US 2013 corn sowings may hit 100 million acres

Investors are already focusing on the battles for acres even into 2013 due to severe concerns over world corn and soy stocks which could expect US corn sowings hit 100 million acres.

 

A clamour for ideas on when the historically-tight inventories of the crops forecast for 2012-13 might ease is prompting a flurry of requests for estimates of what might be in store for Argentine and Brazilian sowings late this year, and US plantings next spring, respected crop scout Michael Cordonnier said.

 

The current outlook is that for US growers, who sowed 96.4 million acres with corn this year, seedings of 98 million acres next year "are probably done deals", Cordonnier, at Soy and Corn Advisor, said.

 

"We might see plantings go as high as 100 million acres," a figure which would be the highest since 1936, if still well below the 1932 record of 113,000 acres. However, while a boost to corn production prospects, the extra area will come in part at the expense of soy, besides marginal land, and plots taken out of conservation programmes.

 

"Next year's US soy acreage will be below that of this year," Cordonnier told Agrimoney.com.

 

"That's why everyone is interested in South America, and its soy plantings," which in fact look set for a boom.

 

Brazil's soy sowings will rise by some 6% to some 26.5 million hectares, about 65 million acres, with Argentine farmers set to boost plantings of the oilseed too. Indeed this, to Cordonnier's mind, is the real reason behind a decision by Argentina's president, Cristina Fernández de Kirchner, on Wednesday (July 18) to unveil export consent for 15 million tonnes of corn in one tranche.

 

"Start harvesting corn boys, export is opening up," said Fernandez, whose regime has been renowned for its close control of grain exports - particularly wheat, a factor being blamed for an estimated fall in wheat sowings to their lowest in at least 40 years.

 

Cordonnier told Agrimoney.com, "She knows that farmers in South America at the moment look like they are going to plant more soy acreage next time, but she wants to encourage corn."

 

Besides domestic needs for corn, Argentina is attempting to seal trade ties with China for exporting the grain.

 

Cordonnier's thesis is based on the observation that for US farmers, "corn is always the first choice", with soy seeded "on what is left over from corn".

 

"For Brazil, it's the opposite. Soy is the first choice. Soy acreage is determined by how much soy gets planted."

This reflects differing yield expectations, with US farmers typically expecting "outstanding corn yields, whereas soy will be OK.

 

"In Brazil, soy yields are expected to be outstanding. It was only five or six years ago that corn yields in Brazil surpassed the average soy yield."

 

In the US, corn is typically expected to yield nearly four times as much. However, Cordonnier's thesis of a switch by US farmers to corn does have some numerical evidence in its favour too.

 

Plugging in latest prices and yields, for 2012 crop, into Purdue University's crop returns spread sheet produces figures for returns, in terms of revenues minus variable costs, of well over US$600 per acre for rotated corn, compared with less than US$450 per acre for soy.

 

For 2013 crop, Chicago's November soy contract was trading on Thursday (July 19) at 2.08 times December corn - a ratio in territory favouring the grain over the oilseed.