The July 22 announcement by National Agricultural Statistics Service that they would resurvey seven states on corn and sorghum acres should not have come as a big surprise given how late the plantings were this year.
"Chase 'em in and chase 'em out" seems to be the phrase to describe the corn market's recent behavior.
For corn, Illinois, Indiana, Kentucky, Ohio, Pennsylvania, Missouri and North Dakota will be resurveyed for corn acres. For sorghum, Illinois and Missouri will be resurveyed.
Some analysts venture to say the summer lows are in. This year's planting weather wasn't quite as bad as last year. No major flooding along the Mississippi River or dikes giving away. Still, planting was a struggle. North Dakota farmers would agree wholeheartedly.
Farmers had from mid-June to early July to certify their acres for prevent plant. So the government should have a pretty good idea of what was and wasn't planted. After looking at last year, the U.S. Department of Agriculture overestimated corn acres and underestimated soybean acres.
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Traders tend to think this is going to occur again. Some estimates have corn acres declining by 500,000. On Aug.12, we will have a good idea where acreage stands.
Next, what will USDA do with yields? I tend to think the yield is going to go up for soybeans and especially corn. September corn dropped as low as $3.04 this week and that is within 14 cents of last December's low of 2.90.
Feeding the world
The U.S. Grains Council's 49th annual meeting recently was held in San Diego. Some interesting comments came out of those meetings. Farmers, you are blessed with the role you will play in the future on the global scale. The world population is forecast to increase by nearly 50 percent, which comes from a broad-based economic growth in low-income countries. Our country should be proud of U.S. farmers and the major role that their production of food is going to play for exports.
Approximately 1.4 billion people in the world live on less than $1.25 per day and 2.1 billion people live on less than $2.50 per day. The growth in population creates the need and the increase in purchasing power, and that translates the need into market demand. As people's incomes increase, the appetite for better food is one of the first things satisfied. As incomes increase from $2 per day to $10 per day, demand for raw agriculture commodities should increase at an astounding pace. The U.S. is perhaps one of the worst affected countries in these economic times. Asian countries are less affected by the economic crisis.
Just think how much growth Asia and India can see as opposed the U.S. As Asia grows, it will continue to command more meat, milk and eggs. The world is expected to grow by 2.6 billion people by 2050.
To secure U.S. grains a home in the global marketplace, it is essential that U.S. producers establish and build solid relationships with global end users.
