With high demand for U.S. crops and low levels of year-end stocks, grain prices will likely remain high for 2008. The debate surrounding the Conservation Reserve Program reflects the concern about crop prices and the resulting impact on livestock producers and ultimately, food prices, says a University of Illinois Extension marketing specialist.
"This concern may not subside until a clearer picture of 2008 U.S. and world production prospects unfold,” according to Darrel Good. “While the current focus is on acreage, prospective yield will become the focal point later in this spring. Crop prices should continue to be well supported, but perhaps in a wide range, for the foreseeable future.”
"As I noted last week, a case can be made that the United States needs to devote a total of five to six million more acres to corn, soybean, and wheat production in 2008," he added.
"The obvious question is where does such an increase come from? Part of the increase would come from reduction in other crops. That type of switch would not ease the potential supply shortage. "Increasingly, the CRP is being eyed as a potential source of increased crop land in the near future," said Good.
Currently, there appears to be little administrative support for early termination of CRP contracts, implying that additional crop land acreage - beyond the expired CRP contracts of 2007- will not be available in 2008 and only a small increase might occur in 2009.
Source: The Pigsite.com