Collins sees less corn, more soy and wheat in 2008
Friday, October 19, 2007, 11:03 AM BROWNFIELD NETWORK

by Peter Shinn

USDA Chief Ag Economist Keith Collins gave a comprehensive update on U.S. agriculture to the House Agriculture Committee Thursday. He predicted less corn and cotton acres next year and big increases in soybean and wheat acres.

“Wheat and soybean prices are, now, much stronger relative to corn than they were a year ago,” Collins testified. “And with fertilizer prices at very high levels, we expect many more soybean acres and fewer corn and cotton acres in 2008.”

Collins said he sees corn acres falling to 87 million in 2008 from 93 million acres this year. He predicting soybean acres will climb from 64 million this year to 70 million next year.
Collins also told lawmakers wheat acres are likely to jump more than 5% in 2008 to 64 million. And he suggested much of that increase could come from expiring Conservation Reserve Program (CRP) contracts, many of which are expiring in parts of the country conducive to growing wheat.

“Now, I don’t expect the wheat price to stay at $8.50,” Collins explained. “But I think in this $5 to $6 range, that’s going to be very attractive for an awful land that’s in the CRP.”

Collins also said farmers’ overall debt to asset ratio would show record strength again this year, largely because farm land prices continue to climb, with values expected to increase 14% in 2007 alone. But Collins also noted those higher land prices have boosted cash rents and made it tough for beginning farmers and ranchers to get started.

Collins also addressed energy price increases, noting that crude oil had jumped from $19 a barrel in 1999 to more than $80 a barrel presently. But he said the high prices ag producers are enjoying for most commodities had largely offset the impact of higher fuel costs.

“In the aggregate, fuel expenditures are not a major component of farm production expenditures, and with strong commodity market demand and prices, their increases have not had a significant effect on U.S. farm income,” Collins said.