Houston, 24 October (Argus) — Corn production acres are expanding to encompass more northern states and more provincial lands in Canada – a trend that will grow and impact fertilizer transport and delivery.
“Acreage has expanded into more fringe acreage in all directions from the main Corn/Soybean Belt,” Joel Widenor of Commodity Weather Group said. “This is at least in large part due to high prices helping to encourage an expansion in acreage and a shift from less lucrative crops.”
The type of crop planted impacts how much of which fertilizer type is applied. Corn requires the largest quantity of fertilizer inputs out of the various cash crops, and nitrogen in particular is a key fertilizer for corn. Transportation of these various fertilizer types will have to evolve as farmers plant in outlying areas, further away from typical fertilizer hubs along the Mississippi river.
The addition of acres toward the north, coupled with low water levels plaguing the river transport industry, has resulted in more fertilizer being trucked and railed this fall in an effort to circumvent logistical complications and reach new demand pockets in the North Plains. Several retailers are concerned about truck availability for hauling dry bulk fertilizer products as they compete for trucks against other dry, bulk commodities.
Although fertilizer and the types of crops being grown is changing, the phenomenon surrounding corn planting is not likely to end next season as corn prices are expected to stay high amid low inventories.
Corn acres are becoming more prevalent in Manitoba and Saskatchewan, Canada, traditional wheat producing areas. By contrast, traditional corn producing areas like Kansas are experiencing the lowest corn output in three years. Although demand has been the driving force for crop expansion, warmer average temperatures are playing a role too, as the average North Dakota summer temperature increased 2°F between 1900 and 2000.
Successful farmers able to reap higher corn yields will opt to plant more of the crop if they can, as corn prices have been strong. Corn prices soared above $8/bushel in August 2012 while soybeans were near $17.50/bushel at the same time. These strong prices are also leading fertilizer retailers to expect more corn-on-corn crop rotations in the coming seasons.
“The expansion of corn and soybean production in the northern plains has been slow, but demand has increased rapidly,” Darrel Good, Professor Emeritus at the University of Illinois' department of agricultural and consumer economics, said. “There is more profitability for corn and soybeans and growers are substituting for these instead of wheat.”
Global crop demand has increased in two key areas, according to Good. He points to China's demand for soybeans and higher corn demand from biofuel producers for ethanol as driving the market.
China is estimated to import 58mn t of soybeans in the 2011-12 season – an increase of almost 6mn t over the prior period, according to the World Agriculture Supply and Demand Estimates (WASDE) released earlier this month.
The US produced approximately 34pc of the world soybean supply in 2010-11 and is estimated to produce about 35pc of world supply in the current 2011-12 harvest.
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