Vol. 23, Issue 10, April 4, 2007
Jose G. Peña
U.S. Planting Intentions
Corn and Wheat Up; Soybeans and Cotton Down
The highly anticipated, USDA’s initial planting intentions report, was released on March 30, 2007, indicating that farmers intend to plant 15.5 percent more corn than last year, 5.2 percent more wheat, 11.1 percent less soybeans and 20.5 percent less cotton. (See figure 1 and table 1). The report surprised the market which was anticipating corn plantings in the 87-88 million acre range. Futures price bids for most corn contracts in the Chicago Board of Trade (CBT) dropped the limit down (20 cents/bu)on the report release date and traded limit down for much of the Monday session (4-2-07) when this report was prepared.
Grain production and markets are in a pivotal point in terms of the role of agriculture to help gain energy independence. Currently, corn use for ethanol production is the most significant activity affecting agriculture. Price bids for corn have doubled since last year and the outlook appears good as demand continues to increase. The planting dilemma farmers faced was if too much corn is planted, prices could fall. With corn prices having reached near-record levels it would be tough for growers to lose, but planting too little corn could mean they easily fail to take advantage of what could be a once-in-a-lifetime profit opportunity.
Even with soybean price bids of near $8/bu, it appears that farmers see corn a more profitable alternative to soybean production.
|TABLE 1. ACRES PLANTED TO SELECTED CROPS|
|(X 1,000 ACRES)|
|1/Intended plantings on March 30, 2007 as indicated by reports from farmers.
USDA’s initial planting intentions report indicated that corn growers intend to plant 90.454 million acres of corn, up 12.12 million acres from 78.327 million acres planted last year and up 10.6 percent from 81.779 million acres planted in 2005. If realized, this would be the largest acreage since 1944, when 95.5 million acres were planted for all purposes. Expected acreage is up in nearly all States. Near record high corn prices are encouraging farmers to plant more acres to corn.
Using the historical corn acres harvested-to-planted ratio and national trend yields of 152.8 bu/ac, corn production this season could approximate a record 12.7 billion bushels. And, using the February 2007 Agricultural Outlook Forum’s projected 2007/08 (new crop) estimate of use at 12.325 billion bushels, production would exceed use by about 350 million bushels. Ending stocks would increase by almost 50 percent from this past seasons problematic ending stock estimate of 752 million bushels.
With an estimated 12.12 million acre increase in corn plantings, it appears doubtful that national average corn yields will approximate trend yields. Using an adjusted national average yield of 147.0 bu/acre (dropping highs and lows since late 90’s) and the historical corn acres harvested-to-planted ratio, corn production this season could approximate 12.2 billion bushels (also a record). February’s Agricultural Outlook Forum’s estimate of use would exceed the production estimate and ending stocks should drop to a critical 638 million bushels, down 15 percent from this past season’s ending stocks of 752 million bushels. (See Table 2). Either way, the corn supply situation would remain volatile and markets would remain strong.
The market situation is going to depend on plantings and weather. USDA’s Planting Intentions Report estimate is based on a survey of 86,000 farmers across the country which were asked, during early March, what they intend to plant this year. Figures of actual acres planted will be released on June 29, 2007 and will form a major determinant of this season’s market. The weather and subsequent planting conditions between these two reports will be crucial.
In terms of the current market, grain stocks are down significantly, supporting a continued strong market. USDA-NASS, March 30, 2007, Grain Stocks report indicated that corn stocks in all positions as of March 1, 2007 totaled 6.07 billion bushels, down 13 percent from March 1, 2006.
Sorghum farmers indicated that they intend to plant 7.109 million acres of sorghum, up 9.0 percent from 6.522 million acres planted last year, and up about 10.1 percent from 6.454 million acres planted in 2005.
Related to corn and sorghum markets, soybean growers intend to plant an estimated 67.14 million acres, down 11.1 percent from last year’s record plantings of 75.522 million acres and down 6.8 percent from 72.032 million acres planted in 2005.
Meanwhile, the cotton market remains flat, even with significantly reduced planting plans. While the estimate of production will decrease significantly, large carry-in stocks will continue to keep a lid on the market. All cotton plantings for 2007 are expected to total 12.147 million acres (11.9 million upland; 292,000 Pima), down 20.5 percent from 15.274 million acres planted last year and down 14.7 percent from 14.245 million acres planted in 2005. Upland acreage is expected to total 11.855 million acres, down 20.7 percent from 2006. Farmers in Texas indicated an intent to plant 5.7 million acres to upland cotton, down 11 percent from 6.4 million acres planted last year. (See Table 2).
Using the historical harvested-to-planted ratio and average yields of about 820 lbs/acre, production should approximate 18.88 million bales, down 13.1 percent from 21.73 million bales produced this past season.
Dr. Carl Anderson, Professor and Extension Specialist-Emeritus, estimates total new crop use at around 20.3 million bales. The estimate of use will exceed production by 1.42 million bales. While ending stocks would drop from this past season, ending stocks would remain at a problematic 7.41 million bales, with an ending stocks-to-use ratio of 36.49 percent. Keep in mind, that this use estimate is based on a fairly optimistic export estimate of 15.5 million bales, up 1.5 million bales from this past season’s export estimate of 14.0 million bales.
|Table 2. U.S. Corn and Cotton Supply/Demand|
|Supply||Million Bushels||Million Bales|
|Beginning S tks.||1,087||958||2,114||1,967||752||5.39||3.45||5.50||6.05||8.80|
|Feed and Residual||5,795||6,158||6,141||5,975||5,800|
|Food, S eed, & Industrial||2,537||2,686||2,981||3,535||4,600|
|Total Domestic Use||8,332||8,844||9,122||9,510||10,400||6.27||6.69||5.89||5.00||4.80|
|Average Farm Price||2.42||2.06||2.00||3.20||3.60||61.80||41.60||47.70||*47.80||??|
|2005/06 estimated; 2006/07 projected, USDA/NASS/WASDE
1/ 2007/08 corn projections based on analysis by the Interegency Commodity Estimates Cosnustee ,2007 Ag Forum 2007/08 cotton projected by Carl Anderson.
2/ Bushels for corn; pounds for cotton
* Averege price for August-Jesmezy 2007 for cotton
Totals may not add due to rounding