The Return Of The King

For many months now, my friends in the ag retail industry have uttered the same refrain when I asked them about the outlook for 2010. “We are hoping it will look a lot like 2007,” said virtually all of them.

So far, this hope seems to be panning out. Based upon the latest planting intentions report from USDA, growers in the U.S. plan to plant 88.8 million acres of corn in 2010, up 3% from both 2009 and 2008. While this is short of 2007’s 96+ million acre total, the report’s projected 164.9 bushels per acre yield would still put the total harvested amount at upwards of 13.3 billion bushels.

“Last year, U.S. growers produced a record corn crop and, if estimates are correct, will do so again in 2010,” said Ohio Corn Growers Association Executive Director Dwayne Siekman. “We see this as a sign that demand continues to grow for our products and that growers will again meet this demand.”

Of course, for ag retailers, this bodes very well for the year. As crops go, corn tends to require more inputs to maintain its yield levels. This fact, coupled with the fact that many grower-customers have essentially “mined” their crop nutrient soil percentages for the past two seasons, will likely translate into some healthy fertilizer and crop protection product sales figures for the year.

In addition to King Corn, ag retailers that stake their business models on soybeans and cotton should also do well. According to USDA’s estimates, soybean acres should be up 1% to 78.1 million in 2010. Likewise, cotton acres are projected to grow 15% to 10.5 million. On the downside, all these crops seem to growing at wheat’s expense, which is forecast to be done 9% to 53.8 million acres for the year.

Given how difficult it was for ag retailers to plan ahead during 2008 and 2009, a return to some market normalcy is welcome indeed. Now if the weather will only cooperate, 2010 will hopefully kick off a profitable second decade of the 21st century for the industry and the companies that prosper from it.

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