The much anticipated June 30 Acreage report from the U.S. Department of Agriculture revealed which crops were "winners and losers" in the battle for planted area in 2008. The report also offered insight into prices and supplies of basic commodities for the year ahead.
It appeared losers, which should include livestock and poultry feeders, soft drink bottlers, ethanol manufacturers and confectioners, will outnumber winners, which should include bakers, pasta makers and brewers.
News was mixed for vegetable oil users, with area for soybeans up 15% from 2007, peanuts up 19%, sunflowerseed up 3% and safflower up 6%, but canola down 16%, flaxseed off 5% and cotton plantings down 15%, indicating less cottonseed oil supply.
The Acreage report offered good news for beer drinkers (and brewers), with harvested area for all wheat up 11%, rice up 5%, barley up 4% and hops up 23% from a year ago. But for those who prefer whiskey, the news wasn’t so good with rye area down 8% and corn down 9% from 2007. Tobacco area was 2% lower.
The increased wheat area also should be good for bakers, with winter wheat area up an estimated 12% and spring wheat up 6%. Pasta makers should have more abundant supplies of semolina with durum area up 22% from a year ago. Durum prices already have dropped significantly from record highs.
For livestock and poultry producers and ethanol makers, the reduction in corn harvested area indicated continued high corn prices in the coming year. Corn futures prices set record highs above $8 a bu in late June but have since declined as weather improved. Reduced corn supply also indicates increased costs for soft drink manufacturers and other users of various kinds of corn syrup.
An 18% reduction in harvested area expected for sugar beets sent prices for sugar to their highest levels since the weeks following hurricane Katrina in late 2005 and should push costs higher for confectioners as well as bakers and drink makers that use sugar. Talk of increased switching from high-fructose corn syrup back to sugar wilted as sugar prices rose.
Some cereal manufacturers also could see higher prices with the drop in corn area and a 4% drop in oats area, which was record low. Oats flake prices currently are record high. Wheat and rice based cereals should fair better. Rice area was up 5% from a year ago.
Supplies of edible beans, including pinto, kidney, navy and black, will remain tight as harvested area of dry edible beans was forecast 9% lower than a year ago and 13% below 2006 acreage.
Although the major supply of fresh potatoes comes from fall plantings, for which the U.S.D.A. has not yet forecast area, harvested area for winter, spring and summer potatoes was down 7% from 2007.
Interestingly, the nation’s farmers in 2008 "found" 4 million more acres to plant to principal crops than in 2007 and 8 million more than in 2006, according to the U.S.D.A. Total planted area in 2008 was 324,029,000 acres, the U.S.D.A. said.
Of course most farmers will remain the biggest winners with a second year of historically high grain and oilseed prices.