US corn acreage to increase

Developments

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US corn acreage to increase

2016-02-19 09:56 |
source: China Grain Network |


according to the U.S. nitrogen fertilizer producer, Chicago CF Industries, this year, U.S. farmers will prefer to sow corn instead of soybeans, and corn planting area is expected to increase by 2.5 million acres compared with 2015.

CF said that based on the current new season crop futures prices, farmers will be better than soybeans to grow corn.

As corn futures prices continue to strengthen relative to soybeans, CF expects the U.S. corn acreage to reach 90.5 million acres in 2016, up from 88 million acres in 2015.

Farmers are currently paying close attention to futures market prices to determine which crops should be planted this spring, and the Chicago Board of Trade (CBOT) new season November soybean prices relative to December corn prices is a key indicator of expected planting returns. Since CF last issued its sown area forecast in October, the ratio has risen to 2.3 to 1, up from 2.2 to 1 at the time.

CF's forecast for corn acreage is comparable to the USDA's forecast, but higher than the 88.86 million acres forecast by Informa Economics, a private analyst.

Soybeans are nitrogen-fixing plants that absorb crop nutrients from the air. Therefore, the decrease of soybean planting area and the increase of corn planting area will help to increase the demand for nitrogen fertilizer. However, CF said that the expected decline in wheat acreage in the United States in 2016 will offset the impact of the increase in corn acreage, thus keeping the demand for nitrogen fertilizer in North America stable in 2016.

CF expects the price of nitrogen fertilizer to rise this spring, as Chinese producers' profits are squeezed and farmers will increase fertilizer application to make up for the impact of less fertilizer application in 2015.

CF said that in the fourth quarter ended December 31, 2015, the average selling price of ammonia fertilizer fell by about 18% to US $458 per ton, while the average selling price of urea ammonium nitrate fell by 12.5 to US $230 per ton. The sharp drop in fertilizer prices was due to weak grain prices and a global production surplus.


Editor: Xi Shi (China Grain Network)