N.D. near the top
FARGO, N.D. - Corn, corn - King corn. This summarizes the news in agriculture, in the wake of a national prospective planting report. OK, it's a little more complicated than that, but corn is not far from the bottom line. North Dakota especially ...
FARGO, N.D. - Corn, corn - King corn.
This summarizes the news in agriculture, in the wake of a national prospective planting report. OK, it's a little more complicated than that, but corn is not far from the bottom line.
North Dakota especially is one of the top states for corn production increases, according to the U.S. Department of Agriculture's March 30 report, which reflected facts from March 1. The state is expected to increase corn acreage a whopping 54 percent from the previous year, according to the report.
North Dakota ranks fifth among states with increases, according to the U.S. Department of Agriculture's National Agricultural Statistics Service. Leading the charge in the percentage increases were Arizona and Mississippi, which nearly nearly tripled their corn acreage, and Georgia and Louisiana, which will double their production.
Perhaps more significant is that North Dakota ranks third in total corn acreage increases - behind the corn behemoth states of Illinois and Iowa. Illinois will increase its acreage 1.6 million and Iowa will up its production of the starchy kernels by 1.3 million acres. North Dakota comes in with a 910,000-acre increase, edging out the 900,000-acre increase in Nebraska, where the football team is named the Cornhuskers. Minnesota will bump acreage 600,000 acres.
Corn suddenly will become the third-largest acreage crop in the state, behind spring wheat and soybeans.
What's going on here? Ethanol, of course, and corn-
favoring crop insurance, but experts say it may be too soon to say whether the acreage projections will hold true.
Nationally, of course, the 90.5 million acres of corn was up 15 percent from 2006 acreage and up 11 percent from 2005 - the highest acreage since 1944, when the nation was producing for World War II.
Soybean acreage projections declined 11 percent - to 67.1 million.
In the Corn Belt, soybean acreages were cut in the Corn Belt, with declines led by Illinois with 1.4 million in reductions.
Nationally, wheat plantings are expected at 60.3 million acres, up 5 percent.
Winter wheat plantings at 44.5 million in the March 30 report, up 10 percent from the previous year. Other spring wheat planting is pegged at 13.8 million acres, down 7 percent from 2006.
About 13.3 million of the total wheat acres are hard red spring wheat. In that category, North Dakota is the big producer, with 6.8 million of those acres, down 7 percent from last year. Montana is down 12 percent, Minnesota down 3 percent and South Dakota down 14 percent.
Durum wheat acreage is 1.99 million, up 6 percent, with North Dakota leading acreage at 1.4 million acres, based on an 8 percent increase from last year.
George Flaskerud, a North Dakota State University Extension Service grain marketing specialist, says corn acres are up sharply, but if there are weather problems, some of those acres probably are going to be lost.
"We've got a whole lot of growing season before the crop is harvested, so there are opportunities for (crop) problems," Flaskerud says. "There are reasons to buy call options on this pull-back. I'd kind of like to buy those call options for upside potential on the price."
A $4.20-per-bushel December call option would cost about 15 cents a bushel.
"It appears to me that it would be worthwhile to buy those call options on whatever people have contracted on corn, or what they have anticipated to sell to the two-thirds (of crop) level."
Soybean prices dropped off after the report came out.
"That's sort of surprising," Flaskerud says. "We have these good carry-over stocks right now. Perhaps it's the energy prices - crude oil - that's partly impacting the soybeans. There's some connection to the demand for using soybean oil for blending it with diesel."
The market hasn't reacted as strongly to the "down side," on soybeans, Flaskerud says. "Still, we have relatively high prices for soybeans and we're only off 22 cents from the market high. I wouldn't go out and buy call options with that one either. I would be more inclined to continue making sales than buying call options."
Winter wheat seeding was more 500,000 acres more than the trade had been expecting. The "other spring wheat" category, which is mostly spring wheat, was down by 1.1 million acres from a year ago. That still should be enough to meet market demand, as long as the yields are good.
"I wouldn't feel it's as important to buy call options for wheat as there would be for corn," he says.
"There is still a potential that the weather could be a problem for the spring wheat," Flaskerud says.
Flax also was down a big amount, about 423,000 acres. That's a 48 percent decrease.
"That's going to help support the flax price for sure," Flaskerud says. "Ag Canada recently said they were expecting a similar decrease, up there."
The report has "some potential for at least holding up the price of flax."
"We're still a ways off from seeing a sharp rally out of flax," he says. "We have such a big carry-over in Canada and it's going to take a while," to work that through.
Oats production in North Dakota will be up about 26 percent to 110,000 acres.
Oil sunflowers will need to come up with more acres, Flaskerud says. Acres were down 193,000 acres.
"Oil sunflowers need at least a half-million-acre increase," he says. "It looks like we're going to see further price increases there."
Edible beans are down 125,000 acres, Flaskerud says. North Dakota, which was 85 percent pintos in the past year, lost 10,000 acres of dry edible beans.
"We may see some higher contract prices for the pintos coming into the spring," Flaskerud says.
Lentil acreage declined, which wasn't a surprise because prices haven't been terribly attractive.
"But in Canada, lentils are going to start tightening up. I think that means higher lentil prices down the road," Flaskerud says.
It isn't clear how North Dakota's corn situation will play out.
Producers in expansion corn areas of North Dakota will have to decide whether they and their elevators have adequate storage to take full advantage of the corn trend. The state Legislature addressed incentives for growers and elevators to build corn drying and storage facilities.
Meanwhile, Red Trail Energy of Richardton, N.D., and Blue Flint Ethanol of Underwood, N.D., started production in the past several months, each pulling in about
18 million bushels of corn. North Dakota's larger ethanol plants in Hankinson, Spiritwood and Casselton are yet to be constructed.
North Dakota's 3.1 million acres in soybeans is down 800,000 acres from last year, a decline of about 21 percent.
Flaskerud says he suspects the state won't lose as many soybeans as the report indicates. With high fertilizer prices, farmers may shift back into soybeans, especially if their area doesn't have the elevator space and drying capacity to handle a big increase in high-bushel corn production.
"At some point, I think producers are going to have to go back and look at soybeans a little closer," he says.
The implications of corn's surge is huge on other crops. One example is sunflowers.
Corn makes big wavesLarry Kleingartner, executive director of the National Sunflower Association, says his industry needs more acres than the report indicates, but says the sunflower market has been competitive in the past six weeks.
"This is a snapshot, obviously," Kleingartner says. "Some of the people I've talked to think 20 percent of the acres remain 'undecided' at this point. I talked to a producer this morning who was not sure what he's doing on some of his acres. This is a pretty strong indication of where things are at."
The sunflower seed industry had been indicating that acres weren't coming together, while the corn option is so attractive, both because of ethanol and because of crop insurance revenue assurance policies that guarantee more than $4 an acre.
"It's tough to compete against that," Kleingartner says, though he notes that confection sunflower acres are up 8 percent mainly because of growth in large-seed industry.
One factor that may bode well for sunflower is that nitrogen applied to the soil last year in drought areas stayed in the soil but migrated downward. Sunflowers can reach deep into the soil for nutrients and may be a good option for using residual nitrogen that is now more expensive.
Market watchers were expecting that South Dakota's sunflower acreage would be down pretty sharply, especially with drought conditions in the central part of the state where sunflowers are strong.
"Farmers like to have some subsoil moisture," Klein-
gartner says, and the soil profile was "pretty well drained" last year. Recent snows and rain probably will be helpful for encouraging sunflowers.