19th Jul 2012, by Agrimoney
The concerns over world corn and soybean stocks are so severe that investors are already focusing on the battles for acres even into 2013 – which could see US corn sowings hit 100m 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 96.4m acres with corn this year, seedings of 98m acres next year "are probably a done deal", Dr Cordonnier, at Soybean and Corn Advisor, said.
"We might see plantings go as high as 100m acres," a figure which would be the highest since 1936, if still well below the 1932 record of 113,000 acres.
Corn vs soybeans
However, while a boost to corn production prospects, the extra area will come in part at the expense of soybeans, besides marginal land, and plots taken out of conservation programmes.
"Next year's US soybean acreage will be below that of this year," Dr Cordonnier told Agrimoney.com.
"That's why everyone is interest in South America, and its soybean plantings," which in fact look set for a boom.
Brazil's soybean sowings will rise by some 6% to some 26.5m hectares, about 65m acres, with Argentine farmers set to boost plantings of the oilseed too.
Kirchner ploy
Indeed this, to Dr Cordonnier's mind, is the real reason behind a decision by Argentina's president, Cristina Fernández de Kirchner, on Wednesday to unveil export consent for 15m tonnes of corn in one tranche.
"Start harvesting corn boys, export is opening up," said Ms 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.
Dr Cordonnier told Agrimoney.com: "She knows that farmers in South America at the moment look like they are going to plant more soybean 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.
Battle for acres
Dr Cordonnier's thesis is based on the observation that for US farmers, "corn is always the first choice", with soybeans seeded "on what is left over from corn".
"For Brazil, it's the opposite. Soybeans are the first choice. Soybeans acreage is determined by how much soybeans get planted."
This reflects differing yield expectations, with US farmers typically expecting "outstanding corn yields, whereas soybeans will be OK.
"In Brazil, soybean yields are expected to be outstanding. It was only five or six years ago that corn yields in Brazil surpassed the average soybean yield."
In the US, corn is typically expected to yield nearly four times as much.
Key ratio
However, Dr 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 spreadsheet produces figures for returns, in terms of revenues minus variable costs, of well over $600 per acre for rotated corn, compared with less than $450 per acre for soybeans.
For 2013 crop, Chicago's November soybean contract was trading on Thursday at 2.08 times December corn – a ratio in territory favouring the grain over the oilseed.
The concerns over world corn and soybean stocks are so severe that investors are already focusing on the battles for acres even into 2013 – which could see US corn sowings hit 100m 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 96.4m acres with corn this year, seedings of 98m acres next year "are probably a done deal", Dr Cordonnier, at Soybean and Corn Advisor, said.
"We might see plantings go as high as 100m acres," a figure which would be the highest since 1936, if still well below the 1932 record of 113,000 acres.
Corn vs soybeans
However, while a boost to corn production prospects, the extra area will come in part at the expense of soybeans, besides marginal land, and plots taken out of conservation programmes.
"Next year's US soybean acreage will be below that of this year," Dr Cordonnier told Agrimoney.com.
"That's why everyone is interest in South America, and its soybean plantings," which in fact look set for a boom.
Brazil's soybean sowings will rise by some 6% to some 26.5m hectares, about 65m acres, with Argentine farmers set to boost plantings of the oilseed too.
Kirchner ploy
Indeed this, to Dr Cordonnier's mind, is the real reason behind a decision by Argentina's president, Cristina Fernández de Kirchner, on Wednesday to unveil export consent for 15m tonnes of corn in one tranche.
"Start harvesting corn boys, export is opening up," said Ms 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.
Dr Cordonnier told Agrimoney.com: "She knows that farmers in South America at the moment look like they are going to plant more soybean 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.
Battle for acres
Dr Cordonnier's thesis is based on the observation that for US farmers, "corn is always the first choice", with soybeans seeded "on what is left over from corn".
"For Brazil, it's the opposite. Soybeans are the first choice. Soybeans acreage is determined by how much soybeans get planted."
This reflects differing yield expectations, with US farmers typically expecting "outstanding corn yields, whereas soybeans will be OK.
"In Brazil, soybean yields are expected to be outstanding. It was only five or six years ago that corn yields in Brazil surpassed the average soybean yield."
In the US, corn is typically expected to yield nearly four times as much.
Key ratio
However, Dr 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 spreadsheet produces figures for returns, in terms of revenues minus variable costs, of well over $600 per acre for rotated corn, compared with less than $450 per acre for soybeans.
For 2013 crop, Chicago's November soybean contract was trading on Thursday at 2.08 times December corn – a ratio in territory favouring the grain over the oilseed.
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