Healthy soil and sustainable growing

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How to hide 8 million acres in plain sight
http://www.theprairiestar.com/articles/2009/04/25/ag_news/columnists/alan.tx
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American farmers and global food makers have had more than a decade to get
comfortable with wild, year-to-year swings in crop acres brought by
decoupled, “freedom to farm” ag policies, an 800 percent boom in
biofuel production and an increasingly hungry export market for American
meat and grain.

Still, the 2009 Prospective Planting Report, released March 31 by the U.S.
Department of Agriculture, held a punch no one saw coming. According to
USDA, American farmers will plant 7.8 million fewer acres of key crops this
year than last.

That’s a lot of acres growing nothing more than last year’s stubble and
next year’s dreams. It’s akin to European farmers not planting one
square centimeter of Belgium and nearly half - the flatter half, one
reckons - of Luxembourg.

On this side of the pond, the unplanted acres are just a million less than
what will be planted to cotton, 8.81 million, this year.


The cuts are as broad-based as deep, says USDA. Corn acres will drop
slightly, down 1.2 percent, while soybeans will show a modest boost.
Plantings for most other crops, however, are forecast to fall; some to
flat-out tumble.

For example, USDA sees sorghum acres down 16 percent, barley plantings down
6.6 percent, winter wheat off 7.3 percent, cotton down 7 percent,
sunflowers down 17.7 percent, durum wheat down 10.5 percent and peanuts off
by a whopping 26.7 percent.


Add all those downers up and 2009 total planted acres are 8.8 million acres
less than 2008. Increased plantings in rice, hay, oats (come on, oats?)
soybeans and sugarbeets, however, trim that total to 7.8 million.

If you let professional market watchers scratch your head over the drop,
though, most will be done long before you.

Why? If you subtract the huge acreage increases farmers unleashed in 2007
and 2008 due to soaring corn prices, says Darrell Mark, an extension
marketing specialist at the University of Nebraska, 2009’s total is
“nearly in-line with plantings seen from 2003 to 2006” when market
prices were - like this year so far - more modest.

As such, he says, the nearly 8-million-acre drop reported by USDA is hiding
in plain sight. “I suspect farmers answered USDA’s questions
truthfully,” explains Mark. “Given the much higher planting costs this
year and moderate market prices, they truly don’t know their complete
crop acres or mix yet.”

Certainly, he adds, planted acreage could drop dramatically this year
compared to last “because access to credit is an issue and some farmers
may be facing a credit crunch.”

But, he suspects, “We will see a good portion of those ‘unplanted’
acres get planted into mostly corn and soybeans - not wheat and not cotton
- as the season progresses because costs have dropped and markets are
rallying.”

Most major commodity markets did rally on USDA’s short-acres report.

In fact, technical analysts - those elves who follow price charts - viewed
the March 31-April 3 Chicago futures action as a “key reversal” week:
prices for all the major farm commodities, except hogs and Class III milk,
according to DTN analyst Darin Newsom, took out their previous week’s low
and high before finishing the week higher. Chartists see that broad
strength as a classic launching pad for a bull market.

I’m far less certain. Even if the projected cut in plantings occurs,
American farmers will plant their third largest corn crop since 1949 and
the largest soy acreage ever. Trend-line yields for both, combined with
ailing - and, by year’s end, conceivably weaker - demand might make this
spring rally look pretty sweet come October.

And if the acreage cuts don’t occur, winter will be long, dreary and
cheap.