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Agriculture Today


Grain production declines as prices increase


Grain production declines as prices increase


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Wilson County News
September 12, 2012
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The remnants of Hurricane Isaac gave much relief to America’s heartland, but many are asking if the storm came in time to save the 2012 corn crop. Prior to the storm’s arrival, the U.S. Department of Agriculture (USDA), National Agricultural Statistics Service, released its August report, showing the severity of the drought of 2012.

Although the year began with a record number of acres planted in corn, which would have positioned the crop to be the eighth-largest in history, the potential harvest has decreased monthly as the drought has continued.

In an Aug. 15 USDA press release, the U.S. Drought Monitor indicated this year’s drought is affecting:

•63 percent of the nation’s hay

•73 percent of the nation’s cattle acreage

•87 percent of the U.S. corn crop (down from 89 percent on July 24)

•85 percent of soybeans (down from a high of 88 percent July 24).

In response to the report, U.S. Secretary of Agriculture Tom Vilsack designated 1,792 U.S. counties as disaster areas, with 1,670 of the counties due to the drought.

Corn

Actual corn planted was estimated at 96.4 million acres, or a 5-percent increase. When abandoned acreage including silage is taken into account, corn production is forecast at 13 percent below 2011 at 10.8 billion bushels -- the lowest production since 2006. Yields are forecast at 123.4 bushels per acre, down from 147.2 last year, or the lowest average yield since 1995.

“Although portions of the eastern Corn Belt received much-needed rainfall during the latter half of the month [July], the moisture did little to benefit drought-affected corn since most of the crop was past the critical pollination stage,” according to the USDA report. “Mostly dry weather and triple-digit heat gripped the Plains and the western Corn Belt at this time. The shift of heat into the western Corn Belt could not have come at a worse time for entering the reproductive stage of development.”

How does this drought compare to the historic drought of 1988? According to the USDA, the total U.S. corn production was 4.9 billion bushels that year.

Farmers in Illinois, Indiana, Kansas, and Iowa, who planted 400,000 acres, will see 120 bushels per acre this year; last year’s average was 155 bushels per acre. Texas producers are expected to bring in 150 bushels per acre, versus last year’s 93 bushels per acre.

In an Aug. 10 webcast, Telvent DTN senior analyst Darin Newsom said total U.S. corn production could come in at below 11 billion bushels; this would be the first time since 2006-7 the yield has been this low.

Newsom said when fields are abandoned for silage purposes, the acres harvested will be adjusted accordingly.

A similar report was given by Renewable Fuel Standards in an Aug. 10 press release.

“Farmers are expected to produce the eighth-largest corn crop on record, despite experiencing the worst drought in 50 years and the hottest month of July in recorded history,” the report said.

Although U.S. corn production is down, with increased production in Argentina, Brazil, and China, the global crop will still be the second-largest on record, according to the USDA.

Responding to the USDA’s updated report, Newsom said the price of corn had increased to $8.25 to $8.49 per bushel, inching ever closer to the $8.50 record high [in 2008].

Soybeans

Newsom also addressed the soybean crop briefly during the webinar. An increase in production of 1 percent from last year has been calculated, with 74.6 million acres planted.

While it is estimated the harvest will be the fourth-largest on record, the heat and lack of rainfall have taken their toll on the crop, according to the USDA report. “By July 29, only 29 percent of the crop was rated as good to excellent. This is the second-lowest good to excellent rating on record for that week since records began in 1980.” In 1988, the number was 24 percent.

Newsom predicts a price of $20 per bushel is not impossible.

Wild card

At the conclusion of the webcast, Newsom said, “Weather will remain the wild card.”

For 2013, Newsom anticipates more acreage to be planted with soybeans or cotton and more acreage will be enrolled in the Conservation Reserve Program. He said less seed will be available next year, due to the seed corn crop damage in 2012, due to the drought.

Only after the crops are actually harvested will the true numbers be calculated. Meantime, corn prices and other grain commodities will react accordingly, and farmers and ranchers will carefully monitor the next growing season to survive.

Production

Here’s a snapshot of production from the Aug. 10 USDA crop report:

Sorghum -- The 248 million bushels of sorghum is up 15 percent from last year with an additional 1 million acres anticipated to be harvested. Record high yields are forecast for Louisiana.

Peanuts -- Forecast is listed at 5.29 billion pounds, or up 46 percent for the country. Record high yields are expected in Georgia and Florida.

Alfalfa and alfalfa mix -- Production for the country is down 16 percent from last year, and estimated at 54.9 million tons. If correct, this will be the lowest production since 1953. The anticipated 2.92 tons per acre will be the lowest U.S. yield since 1988.

Other hay (excluding alfalfa) -- Other hay is down 1 percent and will be the lowest production level since 1990.

Source: Aug. 10 National Agricultural Statistics Service, USDA
 

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