Registrants who tuned in March 1 to the Green Markets 2011 Agriculture & Fertilizer Outlook webinar heard the latest projections about 2011 crop acreage, crop prices, and fertilizer supply and demand. The interactive event, the sixth annual spring outlook conference sponsored by Green Markets, allowed registrants to hear, by means of telephone or computer, three industry experts talk about a range of issues, augmented with more than 60 graphs and slides.
Dr. Gerald Bange, chairman of the World Agricultural Outlook Board for USDA, kicked off the event with a look at the USDA’s most recent acreage estimates for major crops in 2011/12. Bange said USDA is estimating U.S. corn acreage for 2011/12 at 92 million acres, up 4.3 percent from the 2010/11 crop year. Soybeans were projected at 78 million acres, up 0.8 percent from last year, while U.S. wheat production for 2011/12 was estimated at 57 million acres, up 6.3 percent from the previous year.
Bange said all cotton acres are estimated at a whopping 13 million acres in the U.S., up more than 18 percent from the 2010/11 crop year, while U.S. rice acreage is projected to plummet 20.9 percent to 2.88 million acres for 2011/12. Conservation Reserve Program (CRP) acreage for 2011/12 is currently estimated at 31.9 million, up 1.6 percent from the prior year.
Bange compared current retail prices in Illinois with those of one year ago for anhydrous ammonia, urea, DAP, and potash, noting increases across the board ranging from 20-50 percent. He also offered graphs detailing projected net returns for corn, soybeans, and wheat in 2011. In a series of slides detailing supply and demand figures, Bange also mapped out projected prices, stocks-to-use ratios, and ending stocks for corn, soybeans, wheat, and cotton.
Tom Blue, senior fertilizer industry consultant for Blue, Johnson and Associates, said fertilizer use in the U.S. will be up in fiscal year 2011, and total nutrient consumption will approach the volumes achieved in FY2007.
“In absolute terms, we see no basic, inherent shortages of N, P, and K supply capability for both the domestic and international market,” Blue said. “The principal issues are, as always, supply at what price, and is it/will it be at the right place at the right time.”
Blue offered detailed 2011 demand estimates in the U.S. for ammonia, UAN-32, ammonium nitrate, ammonium sulfate, DAP, MAP, 10-34-0, and potash. In a graph tracking the fertilizer and crop price relationship, Blue said 2011 is looking very similar to the banner year of 2008.
Looking ahead, Blue observed several trends in U.S. fertilizer markets, including an ongoing shift from DAP to MAP; growing demand in the Midwest for applied sulfur and capacity additions planned to meet that demand; and continued growth in North American potash capacity “well beyond what increased demand for potash will be in North America.”
Blue addressed as well the recent political upheavals in Northern Africa and their potential impact on regional commodity imports and exports. He also talked about the expansion of the world money supply, and whether firming commodity markets are sustainable or if another crash is in store.
That theme was picked up by Richard Brock, president of Brock Associates, an agricultural marketing advisory service and publisher of The Brock Report. Brock warned of the “managed money explosion” and the influence of index funds on commodity markets. While noting that current bullish attitudes are much the same as they were in 2007/08, Brock cautioned that “every single bull market in commodities has been followed by a bear market. It’s not a question of if, but when and how much.”
Brock contrasted his company’s 2011 acreage estimates with USDA’s, and also offered detailed projections on global stocks-to-use ratios, 2011 crop budgets, and U.S. farm production expenses and i