US Farmers Bet On Which Crops Will Lose Less Money
$CORN, $WEAT, $SOYB
Chicago Corn, Soybean finished lower on ample supplies, Wheat edged higher on technical buying
A 3-year deep dive in prices has sent farm income to the lowest in more than a 10 years, and left parts of the Midwest agriculture economy in recession.For the farmers who grow some of the biggest US crops, choosing what to plant this year has become a bet on which one will lose the least money.
While growers probably would lose $70 on every acre of Corn or Soybeans they sow, the most since Y 1999 those crops offer the best chance at profit if yields are better than average.
So, even with record global surpluses, US farmers are preparing to plant more Corn and Soybean in Y 2016 and devote less land to Wheat, the data show.
The prices for all 3 crops are down more than 50% from their Y 2012 highs, improvements in GMO seed technology to fight drought, bugs and disease have allowed farmers to collect at least 23% more Corn and Soybean per acre since Y 2000, while Wheat yields rose just 3.8%. These are stock piles that no one needs or wants, and are unhealthy to boot.
Increased output of Wheat from Russia and Ukraine is sending US exports to a 44-year low eroding the appeal for American growers who already are mired in the longest income slump since the 1980’s.
To maximize revenue, farmers will expand Corn planting by 1.9% to 89.689-M acres, the 1st increase since sowing a record 97.291-M in Y 2012, according to a survey of 32 trading firms and agriculture analysts.
Soybean sowing may rise 0.8% to an all-time high of 83.345-M acres, the survey showed. Most will be planted in April and May and harvested in September and October.
The US Department of Agriculture will released its 1st planting and production forecasts for Y 2016 Thursday and Friday, during its annual outlook forum.
On 31 March, the USDA will release the results of a national survey of more than 84,000 growers
Maximizing yield is the latest strategy meaning Corn and Soybean offer more Northside than Wheat. US farmers are not going to leave land fallow, but they will sap the soil of all nutrients.
At current prices and average yields, Wheat generates a loss of about $25 an acre.
The loss will be bigger for Corn and Soybean, which are more expensive to plant grow and harvest, even though fertilizer costs have fallen to the lowest since Y 2010 and GE seed prices declined about 10%.
US farmers have been hurt by GE crop and livestock prices that have fallen along with most commodities, after a decade of rising demand and prices led to a rise in output and surpluses.
Net farm income in the US will fall to $54.8-B this year, down from a record $123.3-B in Y 2013, government data show.
Federal government subsidies will ease the burden for growers, who will get a 31% increase in direct payments to $13.9-B in Y 2016. Still, 37% of rural Midwest bankers said their local economy is in recession.
Chicago Board of Trade (CBOT) agriculture commodities finished mixed Monday with Wheat higher, Soybean and Corn futures keep falling after the US government projected last week ample crop stocks would persist through next year.
Chicago Corn led losses as the most active Corn contract for May delivery lost 2.5 cents, or 0.7%, to close at 3.57 bu.
Soybean for May delivery dropped 2.5 cents, or 0.29%, to close at 8.61 bu.
May Wheat delivery gained 1c, or 0.22%, to close at 4.5325 bu.
Chicago Corn and Soybean fell for a 5th session running Monday, pressured by no major weather threats existing in either South America or across the Northern Hemisphere, while South America continuing to add to Y 2016 crop export commitments.
Stay tuned…
HeffX-LTN
Paul Ebeling
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