Crop Acre Shift May Slow
At the same time, the domestic milling industry essentially went away, reducing local demand for cotton. Cotton acres in other areas expanded, out competing U.S. farmers. This put cotton acres in the U.S. up for grabs. Expansion of wheat production in the former Soviet Union, especially the Black Sea region, is eating into U.S. market share for that commodity as well, opening up wheat acres for corn and soybeans.
Jekanowski reported that the situation with rice is different, though the results are similar. “Rice prices have advanced nicely over the past decade and seem to have leveled off,” he explained. “The shift here is more a cost story. Of all the basic commodities, it remains the most costly to produce. Rather than put so much investment at risk, a lot of rice farmers have decided they can make the same return, or close to it, raising the easier to grow corn or soybeans.”
GROWERS ADAPT TO MARKET DEMANDS
If world demand and biofuel policies have caused the recent shift in acres, shifting demand and policies could send them back or in a new direction. Jekanowski doesn’t see that as imminent, nor does he expect the trend to continue at the rate of the past 10 years. Although he admitted it is always difficult to speculate, he feels the shift trendline has plateaued or at least slowed down, with some variation with weather events as seen this spring with delayed planting.
“We can expect a continued growth in the U.S. market for soybeans and feed grains, and there doesn’t appear to be any reason to expect a reduction in China’s commitment to feed their population or a change in U.S. biofuels policies,” said Jekanowski. “The market appears to be where it needs to be, with production supplying the demands that are out there.”
Regardless of how or where the market moves, Royal is sure his growers will adapt. “I feel like I work with the cream of the crop of growers,” he said. “They are always receptive to new ideas.”