Soybeans will make significant inroads into corn production, says the USDA. Link here.
Farmers Expected to Plant More Beans, Less Corn in 2008
WASHINGTON, D.C., March 31, 2008 – U.S. farmers are expected to
plant about 18 percent more soybeans this year, while their corn
acreage could decline by about 8 percent from a year ago, according to
a key government report published earlier today.
The Agriculture Department this morning released the results of its
March 1 survey of farmers’ planting intentions, along with the
quarterly grain stocks report of March 1. The planting numbers provide
a first look at farmers’ plans for this crop year, and they reflect the
first official USDA report for the 2008 crop growing year. A follow-up
survey of farmers’ planting intentions will occur June 1, with
subsequent reports later in the summer.
The prospective plantings report suggests U.S. farmers intend to
plant 86 million acres of corn this year, which is 8 percent fewer
acres than in 2007. Farmers also expect to plant less cotton this year,
with the report indicating 9.4 million acres of that crop will be
planted, a 13-percent decrease from 2007.
Farmers are turning to soybeans and wheat as they reduce corn and
cotton acres. Soybean acreage will increase 18 percent, to 74.8 million
acres, and wheat acreage will grow by 6 percent, to 63.8 million acres.
“The corn number is about 1.4 million acres less than pre-report
estimates,” said Terry Francl, American Farm Bureau Federation senior
economist, “and it appears there will be more acres devoted to beans
than predicted. A whopping 3.1 million acres more than expected will be
planted to beans if this survey is correct.”
The significance of today’s planting intentions report cannot be
underestimated. “Already today, a bushel of corn is up about 10 cents
to 15 cents. Beans are down about 70 cents, and wheat is down 40 cents
to 50 cents,” Francl said.
“We’re likely to see additional downward pressures over the next few
days on beans and wheat,” Francl said. “For corn futures, we’re likely
to see continued upward pressures, with trading possibly into the low-
to mid-$6-a-bushel range.”
The cotton and wheat numbers are close to the pre-report, mid-point
acreage estimates, Francl said. When the acreage numbers for the seven
major crops (corn, beans, wheat, cotton, sorghum, barley and oats) and
hay ground are considered, farmers intend to plant about 4 million more
acres in 2008. About half the new acres will come from ground that was
in the Conservation Reserve Program, and the rest will be ground
devoted to farming for the first time due to higher crop prices.
“History has shown that farmers adjust their planting intentions as
these reports come out, and the market reacts,” Francl said. “Spring
weather is an important factor. The final acreage numbers depend on
spring planting weather, and the markets will begin to reflect
analysts’ thoughts about upcoming weather within a day or two.”
In addition, the latest grain stocks report showed an unanticipated
surprise with March 1 corn stocks coming in at just under 6.9 billion
bushels, more than 200 million bushels less than the mid-point of
analysts’ pre-report estimates, and 90 million bushels below the low
end of the range of pre-report estimates.
“These figures suggest that high corn prices to date have not yet
been sufficient to ration demand,” Francl said. “A similar reaction
occurred after the Dec. 1 corn stocks estimate was published, and many
market observers dismissed the higher implied corn disappearance number
as a fluke that would be offset in subsequent stocks reports.”
Several conditions may explain the greater-than-anticipated corn
usage numbers for the first half of this year, Francl explained. First,
colder and more extreme winter weather increased the amount of feed
going to cattle, especially in the Midwest; second, hog numbers are
about 7 percent higher than projected, so more corn is going to feed
them; third, ethanol use and exports were strong in the first half of
the year; and finally, the 2007 corn crop might have been slightly
overestimated.
The soybean stocks number showed just the opposite, Francl said,
with about 75 million more bushels of beans in stock. That suggests
analysts projected less usage and perhaps a 2007 crop that was slightly
underestimated. Likewise, the wheat stocks number came in slightly
higher than what was expected prior to the latest report.
