PLANTING INTENTIONS REPORT: BEANS UP, CORN DOWN
WASHINGTON, D.C. -- 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.