U.S. Corn Crop Record May Ease Food Costs as Farmers Plant Most Since 1944
Friday, 24 February 2012 | 11:00
The U.S. corn crop may rise to a record as farmers plant the most acres since World War II, easing pressure on higher food
and fuel prices, a government report may show. Soybean and wheat output also may expand.
The 2012 corn harvest may reach 14.235 billion bushels, the most on record dating to 1866, after planting reaches 94 million acres, the most since 1944, the U.S. Department of Agriculture said Feb. 13. Soybean output may rise about 5 percent, while wheat rebounds from a five-year low. The USDA will update its forecasts today at its annual Outlook Forum.
Surging demand and unusual weather in 2011 left U.S. corn stockpiles at a 16-year low and kept prices at their highest annual average ever. Rising output and slower demand may reduce net farm income this year to $91.7 billion, down 6.5 percent from last year’s record, the USDA said Feb. 13. Global food costs in January were 9.9 percent lower than the record set in February 2011, United Nations data show.
“The corn market has been so strong the last several years that in my neighborhood, the number of acres going to corn basically has maxed out,” Jon Holzfaster, a third-generation farmer in Paxton, Nebraska, said in a telephone interview before the USDA forum. “If Mother Nature sees fit to let everyone have a decent production year, we can produce enough bushels to bring this market back down.”
USDA Chief Economist Joseph Glauber is scheduled to release the agency’s forecast at 8:40 a.m. today in Arlington, Virginia. On March 30, the department will forecast U.S. plantings based on a survey of farmers.
Soybean output may climb to 3.215 billion bushels from 3.046 billion a year earlier, when unusually hot, dry weather hurt yields, the USDA said in the Feb. 13 report, part of the department’s 10-year budget analysis from data in November. The wheat harvest may total 2.12 billion bushels, up from a crop of 1.999 billion bushels in 2011 that was hurt by wet weather in northern states and drought in the south, the government said.
Based on the average estimates in a Bloomberg survey of 36 analysts, published Feb. 7, farmers were expected to sow 94.329 million acres of corn this year. Soybean planting may expand 0.4 percent to 75.309 million acres, and wheat may reach a three- year high of 57.233 million acres, according to the survey.
Dry weather may limit output in the Midwest and Great Plains. Northwest Iowa, southern Minnesota and eastern South Dakota were experiencing “severe” drought as of Feb. 14, and “abnormally dry” conditions stretched from Wisconsin to North Dakota, according to the University of Nebraska at Lincoln. From Texas to southwest Kansas, drought was “extreme.”
“We’re going to be on pins and needles until we see how the weather plays out,” David Smoldt, a vice president for INTL FCStone in West Des Moines, Iowa, said in an interview. “We’ve been dry in Iowa into the Dakotas, but we could still make that moisture up here. In Texas and down in that area, they still have a lot of ground to pick up.”
Corn prices have fallen 0.8 percent this year to $6.4125 a bushel yesterday on the Chicago Board of Trade, on prospects of increasing production. The grain is used mostly to make ethanol and livestock feed. Wheat futures have dropped 1.1 percent to $6.4575 a bushel on the CBOT, after the USDA said Feb. 9 that global stockpiles may climb to a record 213.1 million metric tons. Soybeans are up 5.9 percent in 2012 to $12.7875 a bushel.
China, the world’s biggest soybean consumer, last week signed agreements in Iowa and California to purchase 13.4 million tons of the oilseed from the U.S. by Aug. 31, 2013, coinciding with Vice President Xi Jinping’s visit to those states. On Feb. 17, U.S. exporters sold 2.923 million tons to China, the biggest one-day deal on record.
Farm exports by the U.S., the world’s largest shipper of agriculture products, are expected to fall 3.9 percent to $132 billion in the year that began Oct. 1. as other countries become more competitive with the U.S. Brazil may become the world’s largest soybean exporter, topping the U.S. Corn sales by the U.S. will make up 45 percent of global trade, the lowest market share since 1971, as growers in South America and the former Soviet Union become bigger sources, USDA data show.
The average value of an acre of U.S. farmland reached a record $2,350 in 2011, the USDA said in August. Farmland prices in Midwest states monitored by the Federal Reserve Bank of Chicago rose 22 percent last year, the biggest annual increase since 1976. The Kansas City Fed said this month that cropland in its region rose 25 percent last year, while ranch land appreciated by 14 percent. The two Fed banks together cover much of the Farm Belt region.
“The portion of the farm economy that is in grain production is sitting in a very strong position right now,” Tom Neher, a vice president for lender AgStar Financial in Rochester, Minnesota, said before the USDA’s forum. Farmers “are actually paying down debt, and that gives them a lot more resiliency if things were to turn to the downside.”
Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, the USDA said Feb. 16. Wheat ranks fourth at $14.4 billion, behind hay.