"What's driving everything is corn and ethanol. That is at the base of it all."
That's how North Dakota Agriculture Commissioner Roger Johnson summarized his view of the June acreage report from the National Agricultural Statistics Service that shows a record corn crop is in the ground. The impact of that reality is 1 million fewer acres are in spring wheat this year and soybean acres are down 21 percent from last year.
"The big news in the June report to me is the decline in spring wheat, down a million acres, that is huge," Johnson said. "The March report showed most of the decline coming out of soybeans."
North Dakota is the nation's top spring wheat producer, and the June report states acreage is down 12 percent nationally to 13.1 million acres.
"Spring wheat is going to have a significant premium relative to winter wheat," Johnson said of the likely future impacts of the June report. "The other thing that people aren't talking about yet is the stocks report came out as well. Stocks show everything is down."
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Spring wheat prices continue to sit well above $5, which is emptying storage bins around the country.
"$6 wheat always comes when people don't have any wheat," Johnson said.
Soybeans are down 21 percent to 3.1 million acres in the state, and nationally an estimated 64.1 million acres are planted, down 15 percent from last year and the lowest level since 1995.
The other thing that stands out for Johnson is the June acreage report shows minor oil seeds such as canola and sunflowers, and barley are up in the June report, the March report and over last year.
Canola is estimated at 1.05 million acres, the highest in five years in North Dakota, and oil sunflower acres are forecast at 790,000, up 20,000 from last year. Meanwhile, barley acres are up 32 percent at 1.45 million this year.
Other expected increases include durum at 15 percent at 1.5 million acres and oats are up 80,000 acres to 500,000.
The June report estimates 2.5 million acres of corn are in the ground in North Dakota, which represents a 48 percent increase from last year and is the highest level since records were first kept in 1929. Nationally, the estimate is 92.9 million acres of corn is planted, which is 19 percent more than a year ago and 3 percent more than the March estimate. The record planting for corn came in 1944 at 95.5 million acres.
"The corn bias is even stronger in the June report," Johnson said.
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The bottom line is grain producers have some great pricing opportunities in front of them as market conditions make some major adjustments to accommodate the growing biofuels industry.
