Acre shifters: What factors impact last minute planting decisions?

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Like many Corn Belt farmers, Tim Bittner has a good idea which of his acres will be planted to corn and which planted to soybeans on his Bloomington, Ill. farm this spring. But at least 20% of total acreage remains up for grabs based on current gyrations in market prices and input costs. The market has yet to send a clear signal favoring one crop or the other.

How late in the game can you make changes in planting decisions? That depends on factors that limit flexibility, such as past fertilizer applications, attention to rotation or spreading production risk.

In Bittner's case, factors include dedicated storage, available labor and harvest timeliness.

"We dry and store all of our corn and have dedicated storage for soybeans so I'm somewhat committed to a similar percentage of corn and soybeans each year,•bCrLf he says. "We don't have a lot of labor in our operation so I look at the corn-soy mix and ask how timely we can be at harvest since we can harvest beans a lot quicker than corn.•bCrLf

Adds Paul Fossum of Moorhead, Minn.: "I've got open acres, about 10% of my cropland, and that's typical with many of the farmers I've talked to this winter. I'm waiting on the markets."

Locked in Bittner bought anhydrous ammonia last summer and applied N on about 80% of his expected corn acres last fall. If the remaining 20% is planted to corn he plans to apply urea or 28% solution to cover N needs. 

Because of high P and K prices Bittner has made soil tests to see where rates might be shaved for a year or two. On some of his farms, rates could be reduced by as much as half. "Now with fertilizer prices coming back down, we're probably going to lock them in this week,•bCrLf he says. "I may go back and increase those P and K levels. It's just a function of keeping our costs in line for profits.

"We're playing with a lot more input buying strategies than we used to in the past,•bCrLf he says. "We're trying to project market opportunities but also trying to watch costs to protect our margins.•bCrLf

Market signals Missouri extension specialist Melvin Brees says grain prices are usually what determines last-minute planting decisions. The past two years saw the markets "bid•bCrLf for corn acres in 2007 with a January corn/soybean nearby futures price ratio near 1.9/1, which favored corn. The tables turned in 2008 with a January soybean/corn nearby futures price ratio of about 2.5/1 that favored soybean production.

These signals, along with other factors, led to a large increase in corn acreage in 2007 followed by a big switch from corn to soybeans in 2008. We haven't seen any such clear signal so far in 2009.

Even so, markets are watching the following factors for clues:

-USDA's February 10, 2009 supply/demand estimates included enough production concerns to provide underlying support for prices. Encouraging export numbers and a potential bottoming out in the ethanol industry all seemed to point toward higher grain prices in coming weeks;

-Weather in South America — the drought in Argentina and to a lesser degree, Brazil, is supporting corn prices;

-Changes in domestic and international economies. If there are signs the recession is easing demand should climb. Combined global corn and wheat demand is still up by 1.44 billion bushels this year. That's down from last year's increase of 1.82 billion, but it's still the eighth largest increase of the past 35 years, notes Farm Futures Market Analyst Arlan Suderman;

-Value of the dollar, energy prices and fund trading activity;

-Input costs, especially for fertilizer and seed;

-Potential fertilizer delivery problems. With fewer fall applications, we may see a rush to book spring nitrogen needs if corn prices recover. The industry's infrastructure may not be able to keep up with the delayed demand.

Let me know what clues you're watching to make last minute planting decisions.


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