Monday, February 11, 2008

2008 Crop Estimates

Even the USDA guessed wrong on the acreage that went into corn and soybeans in 2007 and had to revise their totals, so don't take my word as gospel. But if the latest survey of Iowa and Nebraska farmers is any indication, 2008 should see a return to the 50:50 ratio of corn to beans seen in Midwest farms. Of the 2,500 farmers surveyed, the consensus was an increase in soybean acres by 12% and a decrease in corn acres of about 5%. The survey, conducted at the 53rd annual Iowa Power Farming Show, can be used to test the waters of what might be coming in the next few months in terms of planting soybeans or corn. From these results, it looks like the large push towards corn-dominated agriculture that was seen last year might be subsiding and a return to more normal agricultural practices will occur. A 50:50 ratio is important to balance the energy intensive corn with the nutrient-providing legume (soybeans). Rotating these crops insures correct nutrient balances, along with decreased fertilizer needs.
Although farmers in the survey sited several possible reasons for planting more soybeans this year, it might not be too hard to narrow down a few key points. The first is that in the past year, corn prices have increased 30% while soybean prices have rocketed up by 81% of their price. Add to this the fact that fertilizer prices continue to rise and soybeans begin to look more and more attractive. In the end, I think it makes good ag. sense to continue to rotate and protect the land as best as possible. Rotation the crops not only allows for more protection of soil nutrients, it also prevents a farmer's exposure to volatility that might occur in one of the markets. (Although this is unlikely because soybeans and corn have historically been tied to a 2:1 price ratio).
One more interesting fact that came out of this survey was that large scale farmers, (people farming around 10,000 acres), were less likely to reduce their corn acreage in the coming years. This is interesting and a point that I would like to comment on in future posts -- how commercial-scale farming is impacting agriculture in this volatile pricing period, particularly among cattle prices.
I'll end by repeating that I think 50:50 rotations are good policy, but it will be interesting to see if the corn acreage in the US falls by 5% across the board. If we are only going to get around 310 million acres in corn this year, we could be in for a bumpy ride in terms of corn stocks. Let's pray for good weather...

A beautiful shot of Iowa corn from:

1 comment:

mus302 said...

I think we will see more acres overall devoted to the principal crops this year than what we have seen in the last few years. So some new corn acreage will come from land that has been out of production for a while.

Another variable is cotton acres. Last year a lot of the increased acres that went into corn came from cotton and soybeans. It will be interesting to see if some of those acres go back to cotton next year.

But you know every year farmers have to take a gamble on what to plant to make the best money. Last year corn looked to be the best bet and as a result more acres of corn were grown. This year, with prices as they are now a lot of crops look like good bets.