US Farmers Rush To Grains, Avoid Sugar, Cotton
Date: 25-Feb-08
Country: US
Author: Karl Plume and Rene Pastor
At its annual outlook conference, the US Agriculture Department projects 90 million acres of corn to be planted this year, slightly down from last year, but still the second-largest in 64 years.
Soaring grain prices are expected to lure the most land into wheat, corn and soybeans since 1984.
As a result, wheat production is projected to soar 13 percent to 2.33 billion bushels as farmers expand planting for the grain by 6 percent.
Wheat prices have jumped 112 percent over the past year with poor crops from such countries as Australia and Canada and rising demand for the grain from developing countries. US farmers can expect a strong export market early in the year but will face rising competition from abroad as production rebounds internationally, the USDA said.
The corn crop, boosted in recent years by the booming ethanol industry, was projected at 12.81 billion bushels, down 264 million bushels from 2007's record but still the second-largest on record.
Soybean growers would reap the fourth-largest crop, 2.95 billion bushels, due to larger plantings.
"Record prices and large year-to-year gains in net returns for the three major field crops are expected to shift area away from other crops, principally upland cotton, and draw additional land into field crop production," said USDA.
With free trade in sweeteners taking effect on Jan. 1 under the North American Free Trade Agreement, US sugar farmers are expected to be hit hard by rising imports from Mexico.
US sugar production this year will fall 4.6 percent to 8.1 million tons, mostly as sugarbeet growers in the Plains switch to other crops that offer a higher profit.
Mexican sugar imports are projected to surge to 806,000 tons from 475,000 last year and only 60,000 tons in 2006/07.
Cotton plantings at 9.5 million acres would be the smallest in 25 years, setting the stage for a crop of 15 million bales, the smallest since 1998. But analysts said with the market in such tight supply, cotton prices could stage a recovery this year.
Rice plantings would decline by 2 percent, to 2.7 million acres.
Along with shifting land from cotton, farmers will plant more double-crop soybeans and plant corn, wheat and soybeans on land newly released from the long-term Conservation Reserve. Roughly 2 million acres left the reserve last October.
Ethanol distillers will use 4.1 billion bushels, 31 percent of this year's corn crop, to make the alternative motor fuel. By comparison, they are using 25 percent of the 2007 crop. One bushel makes 2.8 gallons of ethanol.
Some 3.5 billion lbs of soyoil would be used to make biodiesel this year, up slightly from from last year. One gallon of biodiesel is produced from 7.8 lbs of soyoil.
US beef exports are forecast to rise 17 percent in 2008 from a year ago, due in part to rising sales to Japan, but the Agriculture Department said it does not foresee shipments resuming any time soon to another key market, South Korea.
(Writing by Russell Blinch, additional reporting by Charles Abbott and Christopher Doering; Editing by Matthew Lewis)