What is in this article?:
• Farm household debt levels appear to have stabilized despite increasing land values.
• While prospects generally look bright, recent sharp increases in prices for major crops are generating a range of concerns.
Unlike 2007 through 2009, when cotton prices remained low relative to competing crops, record high cotton prices should result in increased cotton acreage for 2011. Upland cotton area is forecast at 12.75 million acres for 2011, an increase of almost 2 million acres. Improved returns could lead producers to plant cotton on cropland previously planted to corn, soybeans, sorghum, rice and other crops.
Higher prices will result in more corn planted in 2011. Corn planted area is expected to increase to 92 million acres, an increase of 3.8 million acres over 2010 levels, and the highest level since 93.5 million acres were planted in 2007. Unlike 2007, when soybeans fell at the expense of corn, soybean area is expected to hold its own this year, increasing slightly to 78 million acres. One reason for the increase in soybean area is an expected rebound in double-cropped area.
Because of the late harvest in 2009, 2010 winter wheat seedings were down almost 15 percent. Soft red winter wheat seedings were down more than 35 percent. As result, double-cropped soybean area in 2010 totaled approximately 2.3 million acres, the lowest level since NASS began reporting double-cropped area in the late 1970s. Double-cropped area is expected to increase to 5-6 million acres in 2011, reflecting increased winter wheat area, particularly in the soft red winter wheat areas of the corn belt (up 47 percent from last year) where significant amounts of double cropped soybeans have been planted in the past.
Higher expected returns for soybeans, corn and cotton will likely result in fewer acres of rice being planted in 2011. Rice planted acreage for 2010 is estimated at 2.88 million acres. If realized, this would be the smallest planted area since 2007.
Higher market prices will encourage greater plantings this year and increased crop production this fall. Assuming normal weather this spring and summer, production of corn, soybeans and upland cotton are expected to be up in 2011. Despite higher planted acreage, wheat production will be affected by dry weather since last fall in the hard red winter growing region and by a return to more normal yields this year. Rice production will likely fall reflecting smaller planted area.
Despite increased production of corn and soybeans, grain and oilseed markets are still forecast to be tight due to strong export demand and strong demand for biofuels. Unless this year’s weather is better than normal, or plantings increase more than expected, stock levels for corn and soybeans should see only modest rebuilding in 2011/12. This will likely mean continued volatility in those markets.
US wheat market will tighten further.
Despite increased wheat plantings, total wheat production is expected to fall to 2.08 billion bushels in 2011/12. Higher abandonment rates in the southern plains will reduce harvested acreage to levels comparable to last year (47.5 million acres) and a return to trend yields (43.8 bushels per acre) will mean wheat production levels will fall about 6 percent from last year. With a lower carryin this year, total supplies are forecast at 3 billion bushels, down 9 percent from last year.
World wheat production is expected to rebound in 2011/12 which will reduce export opportunities. As a result, U.S. wheat exports are forecast at 1.15 billion bushels, down almost 12 percent from this year’s 1.3 billion bushels. With domestic food and feed use projected at similar levels to last year, ending stocks are forecast to fall to 663 million bushels. This would mean a stocks-to-use ratio of 28.3 percent, the lowest since 2007/08. The season average farm price is forecast at a record $7.50 per bushel, though prices will likely moderate in the late summer and fall as spring planted crops in the Northern Hemisphere come to market.
Corn market to remain very tight.
Despite an anticipated 4 percent increase in planted acreage, the corn market will continue to be tight in 2011/12. Assuming harvested acreage of 84.9 million acres and a trend yield of 161.7 bushels per acre, corn production for 2011/12 is forecast at a record 13.73 billion bushels. Because of this year’s smaller carryout, total supply for 2011/12 is estimated at 14.425 billion bushels, an increase of only 250 million bushels over 2010/11 levels.