- Two factors will likely determine how much grain is planted in the Carolinas and Virginia: cotton and good memory.
- Cotton prices continue to climb and too many farmers remember the disaster of the 2011 grain crop.
“I don’t see any real advantage of waiting to buy fertilizer, but I don’t see a real price advantage for buying it now. If you can forward price some and not have to store it, then it makes sense to buy now. Or, if you have storage, you might save a little money by buying it now,” Pottorf says.
“There is a lot of volatility in the fertilizer market, and it’s hard to predict prices. Few people, including me, didn’t see coming a 50 percent price increase for some fertilizers between last summer and now,” he adds.
Nationwide, Pottorf says there is little doubt grain acreage will be up. The supply of corn, or more precisely the stocks-to-use ratio for corn, is near a record low. Soybean stocks-to-use ratio is at a record low. Based on these realities, it’s hard to see how prices could go down any time soon.
The monthly data for use of corn for ethanol is likely low. So, the stocks-to-use ratio for corn could go even lower before we ever get to the 2011 corn harvest. “All that means to me that corn prices are going to be strong throughout the summer,” Pottorf says.
Rebuilding stock-to-use ratios is difficult to do. Pottorf explains, “If we get 3 million extra acres of corn, versus last year, and the yield is around 162 bushels per acre, we will barely produce what we need in the U.S. With any type crop failure, the stocks-to-use ratio will be even lower and prices will reflect that heightened demand, the Minnesota-based economist says.
“We could easily be in a situation in which we plant 3 million more acres of corn and a million more acres of soybeans, get good yields in both crops, and lose ground on rebuilding the stocks-to-us ratio margins, he adds.
Southeastern grain growers have some strong cards in their hand going into the 2011 planting season. It will be interesting to see how growers play their cards.