SOURCE: Rabo AgriFinance

Rabo AgriFinance

April 04, 2011 14:50 ET

Rabobank: United States Needs to Increase Planting of Key Crops to 237 Million Acres in 2011

U.S. Field Crops Could Compete for Acres to Achieve Necessary Supplies

ST. LOUIS, MO--(Marketwire - April 4, 2011) - Ongoing analysis by the Rabobank Food & Agribusiness Research and Advisory (FAR) group, concludes that in order to build U.S. and global supplies to acceptable levels, more acres of corn, cotton, soybeans and wheat will need to be planted this year in the United States than ever before. It is projected that 237 million acres of these four major U.S. crops need to be planted in 2011.

The findings are based on the Rabobank FAR team's global agribusiness marketplace report, "The Battle For Acres: U.S. Field Crops in Competition." As the leading provider of financial services for the global food and agriculture industry, Rabobank created and maintains the FAR unit to conduct ongoing research and analysis on issues of importance to agriculture around the world. Rabo AgriFinance, part of Rabobank, provides this exclusive information to its client producers and agribusinesses in the U.S.

The 237 million acres estimate represents an increase of 7 million over 2010's total planted acres, and an increase of 3 million over 2008's record high of 234 million planted acres.

Co-author Sterling Liddell, Vice President, FAR, says that tight fundamental conditions among the four major U.S. crops are driving a stronger-than-normal competition for production acres. "Global events are adding volatility on both the supply and demand side," he states. "Conditions are different this year from 2008, as all crops have rallied strongly in need of more U.S. production. In particular, cotton and sugar are back in competition with corn, wheat and soybeans."

While profit margins favor corn over soybeans and wheat, the report also noted the differential is not strong enough to drive significant substitution among the four major crops. This implies a need to expand planting by at least 2-3 million acres onto land not currently producing one of the four major crops.

Liddell notes that U.S. producers should expect high price volatility to continue through the planting season. "Markets will continue to be volatile as they try to sort out how much of each crop should be planted in the U.S. this year," he says. "As 'The Battle For Acres' makes clear, the consequence of the current competition among major crops, other principal crops and land uses, as well as historical precedence, is an intensely volatile environment which could drive prices to historical highs."

Media can obtain the full "Battle For Acres" report by contacting Lisa Verbeck at Rabo AgriFinance.

About Rabo AgriFinance
Rabo AgriFinance is a leading provider of financial services for agricultural producers and agribusinesses in the United States, adding value with industry expertise, client-focused solutions and long-term business relationships. Rabo AgriFinance's nationwide network of relationship managers, crop insurance and risk management specialists offers a comprehensive suite of services, including loans, crop insurance and sophisticated risk management products. Rabo AgriFinance is a division of Rabobank, the premier bank to the global agriculture industry and one of the world's largest and safest banks.
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