LSU AgCenter ag economist predicts acreage mix will change this season

young soybeansProjections indicate that corn and cotton acreage will increase this year but less grain sorghum and soybeans will be grown in the state, an Louisiana State University AgCenter economist told attendees of a recent AgCenter crops and cattle forum in central Louisiana.

Kurt Guidry said ending stocks for corn are smaller this year. The U.S. Department of Agriculture is projecting 92 million acres of corn will be planted this year, a 2 million acre increase from 2018.

Currently, prices are hovering around $3.60 per bushel. That price has increased overseas demand for U.S. corn, and export demand is 50 percent higher than a year ago, he said.

The strong pace in export demand may force the USDA to increase their marketing year expectations for total export sales, which could further reduce ending stocks for the 2018-19 marketing year. A reduction in ending stocks coupled with minimizing the acreage increase in 2019 to around the 2 million acre level could help boost prices to the $4 range, Guidry said.

The corn export capacity of Argentina and Brazil has been reduced because those countries are using much of their shipping facilities to export soybeans to China.

U.S. soybean acreage expected to decline

U.S. 2019 soybean acreage is projected at 82.5 million, a decrease of 6 million to 6.5 million acres from last year. The 2018-19 marketing year price is projected at $8.60 per bushel, he said.

“If acres in 2019 actually fall by 6 to 6.5 million acres, that potential reduction in supplies could help support prices for the 2019 crop at or above the $9 level,” Guidry said.

Ending soybean stocks are more than double the previous year, and the Chinese have only bought 1.9 million metric tons compared to 24.3 million metric tons last year at this time, a 92 percent decrease, he said.

But export commitments to China for the remainder of the 2018-19 marketing year stand at 5.5 million metric tons. “This level of commitments brings some hope of a return to more normal trade with China,” Guidry said.

Brazil’s soybean crop has been reduced by 5 million metric tons this month because of bad weather. “That is a huge amount in one month’s production,” he said. A metric tons is about 2,200 pounds.

Cotton acreage should increase by 2 to 3 percent this year from last year’s total of 14.1 million acres, Guidry said. Last year’s crop was nearly a 2 million acre increase from 2017.

Prices have been able to remain above the 70 cents per pound level during the 2018-19 marketing year. This despite the increase in planted acreage because a larger-than-normal acreage abandonment during 2018 helped keep production from ballooning.

“However, if acres increase in 2019 and the number of abandoned acres return to a more normal level, the resulting increase in cotton supplies could pressure prices below the 70-cent level,” he said.

Sorghum demand remains sluggish

Grain sorghum demand is low. China has been the biggest buyer of U.S. grain sorghum.

“This year, they’ve bought none from us,” Guidry said.

A return to high demand by China for grain sorghum should not be expected, regardless of the outcome of ongoing trade talks.

Guidry also said the new Farm Bill gives row-crop producers more flexibility with the option to choose between the price-loss coverage or agricultural risk coverage programs on an annual basis starting with the 2021 crop year.

The LSU AgCenter contributed this article.

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