During most of the past summer, those in agriculture talked about whether or not there would be a 10 billion-bushel corn crop. Harvest found a crop hovering close to the prediction: over 9.9 billion bushels. That, says Riceland president Dick Bell, “is a lot of corn.”
“But we've done a good job in making it disappear. There's been good off-take, not only from livestock feeding but also from ethanol. Our exports until lately have been running at good rates,” says Bell, who spoke March 2 at the Mid-South Farm and Gin Show in Memphis.
Bell says that over the last couple of months, two things slowed corn down. The StarLink issue is one. “This was a biotech product that had feed approval but not food approval. It got into the food chain and caused problems in export markets, particularly Japan.
“The other slowing effect comes from China. They've been exporting more corn than was anticipated. Hopefully we won't end up with a larger carryover than was expected,” says Bell.
Bell believes corn acreage will be down in 2001 by around 3 or 4 percent. That's primarily due to the high cost of fuel and fertilizer — both important components of corn production. But even with lower acreage, he expects a 9.7 billion-bushel crop.
“In terms of price, we think we'll be up 15 cents per bushel more than prices we've seen in the current year. We should see something above $2 per bushel.”
Sorghum isn't as big a crop as it once was in the Mid-South, says Bell. Last year, there was a poor crop, mostly due to problems in Texas. “We do expect the Texas crop to be up some 25 percent this year. We expect the Mid-South to see a 4 percent jump.”
Wheat has become a very important crop in the Mid-South, particularly in Arkansas. “We've improved our quality over the last decade and the credit goes to an excellent breeding job. In terms of market, Mid-South wheat has really enhanced its reputation.”
For 2001, Bell expects a soft red winter wheat crop of 415 billion bushels in the United States. That's down 12 percent.
“Exports are important to soft red winter wheat. A third of all our disappearance goes outside the country, primarily to Egypt. Egypt really prefers white wheat. There is an interest in developing white wheat, and I encourage breeders to look at that.
“One of the markets I'm most proud of is Mexico. The NAFTA agreement is very important to U.S. agriculture. If you look at the numbers, Mexico is almost always first or second on the list of crops we export.”
In terms of the market situation, wheat can turn around very quickly, says Bell. There hasn't been a big buildup in world stocks, and all it would take is trouble in a wheat-dependent country for the market to turn.
“There is some optimism with this crop,” says Bell.
“On the old rice crop, which we're in now, we had a 425 million-bushel crop. That's a large crop. Long-grain rice, which we grow mostly in the Delta, was down 13 percent. But medium-grain rice was up 10 percent and that's where some of the problems are coming from,” says Bell. Long-grain is down because of the drop in Louisiana production. The state's drought and salt-infusion troubles are to blame.
In terms of the new crop, Bell says, plantings will likely be up. That may be surprising considering prices. In Arkansas, Bell expects the state to be up 4 percent in acres planted.
“We think prices will be stronger, but not by much. But something may happen to make prices jump. As with wheat, we don't have massive stores of rice. It wouldn't take much to turn prices around. If the Brazilian crop comes in short, we'd be off to the races.”
LDPs are extremely important, particularly with soybeans, says Bell. “When the LDP got up to $1 per bushel, growers couldn't help but take it. Basically, the program is ruling the roost.”
In 2000, the United States had a 2.8 billion-bushel crop — a record. Bell says the country's utilization has been good with about 1 billion bushels exported.
“We're going to move almost that entire crop in 2001-02. That's amazing, and we've created a tremendous consumption base around the world.
“Right now, everyone is focused on the South American crops. I don't think there's any question they'll have another record year. In the case of Argentina, they'll probably have a crop 25 percent better than their previous record.”
This spring the supply of soybeans in the world is larger than the supply last fall. “As far as I know, that's a first. We've never had more supply in the spring than the fall.”
Another market depressor is palm oil supplies. Oil palms in Malaysia take about five years to begin bearing and then can bear for about 15 years. Unfortunately for American farmers, quite a lot of palms were planted a few years ago and they're now coming into production, says Bell.
“We've had a 40 percent increase in Malaysian palm oil production since the mid-1990s and 80 percent of their oil is exported. That meant soybean oil prices have been put down to 13 or 14 cents per pound.
“There doesn't appear to be much relief coming from palm oil. I find it interesting to note where the palm oil is going. Much of it is going to India, but Europeans are buying a whole lot. These are people supposedly worrying about their health. What I've learned about palm oil is this: use palm oil if you want to raise your cholesterol. But they're a big user because it's cheap.”
With the new crop, Bell thinks plantings will be up quite a bit — mainly in the Corn Belt. Americans can talk about South America increasing its soybean acreage, but U.S. acreage is up, too, says Bell. Since 1992, U.S. soybean acreage is up 29 percent.
“Something that drives me batty is looking at North Dakota and South Dakota. I always thought they grew wheat. But if you look at the Dakotas combined, they're going to have quite a bit more soybean acreage than the Delta.
“We're looking at a 2001 crop of 3 billion bushels in the United States. But there are some bright spots out there. The main one is China. Their production isn't keeping up with consumption.
“There are 1.3 billion Chinese, but the important part is the 200 million Chinese with money — the middle class. They're the ones who are spending money on things we sell. We need to work on that market.”