Corn plays a numbers gameIn about two weeks, farmers in Kansas will start to plant winter wheat. Traders will be watchful of how much the acreage increases in the top producing state in the United States for wheat.
In about two weeks, farmers in Kansas will start to plant winter wheat. Traders will be watchful of how much the acreage increases in the top producing state in the United States for wheat. Nearly one-fifth of all wheat grown in the U.S. is grown in Kansas and nearly 63,000 Kansas farmers grow wheat in a year. The price of wheat had escalated on the December Chicago Board of Trade futures in early August and since has fallen back. Prices are so attractive that U.S. wheat acres are forecast to steal acres from corn. While on the backside of wheat, soybeans should gain some acres next spring. Wheat futures are getting a bit oversold for now and may bide time by bouncing in value.
Still, for now, it appears that wheat priced in all the bullish news of reduced production by the world’s cheapest competitive exporters. Russia, Ukraine and Kazakhstan will be in need of feed wheat, but wheat values will be too high compared with corn. Therefore, with acres on the up-tick in the U.S., corn is going to have to vie for acres come spring.
Farmers are getting ready to harvest a corn crop that is coming home quickly — good news for the corn farmer is that drying costs will decline this year. It is at this time that many farmers are beginning to plan the acreage for 2011. This most likely will be a fall where the farmer will be able to get fall tillage done timely and apply his spring fertilizer. Corn values have been range bound for the past two years.
I look for December corn futures to test the 456 to 460 level by Sept. 12. Still, that price may not entice enough farmers to hold out wheat acres and plan corn acres. Until the Pro Farmer tour, producers in the Midwest thought they would set new record yields again this year. I struggled with that thought as the temperatures were good for disease and pests, but not good for the transfer of sugars to starch in the corn kernel. Still, traders didn’t believe what plant pathologists and agronomist already knew.
The Pro Farmer tour indicated a national yield down from last year, but not by all that much. Well, the jury is still out, but early corn yields in Illinois are not good and test weights are down. Yields are coming in 5- to 30-plus bushels to the acre down from last year. I had thought that the early planted corn would be our best. Well, if so, then there are bigger disappointments coming. Nebraska and Minnesota may be the darling producers this year.
USDA estimated the U.S. corn yield at 165.1 bushels per acre in their August Supply and Demand numbers. That probably is the highest number for the year. Where will we end up for national yield? A number closer to 159.5 bushels per acre to 160 bushels per acre would be more like it.
I don’t see cheaper corn prices this next year.
It is also a year of La Nina and South American weather is not congenial already. In the U.S., the longest we have gone without a drought in Iowa and perhaps, the Midwest, is 23 years. This summer was year 22.
U.S. stocks are not so plentiful that give a drought and an increase in world demand. Corn is going to feel the need to compete for acres. The U.S. is the world’s largest corn exporter and our supplies are not so plentiful. Guess we are blessed that we do have good supplies of wheat to pick up some food slack there.
Color me a bull for 2010 to ’11. Two years of range bound grains are about to come to an end.