U.S. farmers probably will increase corn planting by 3.7 percent this year from 2010 and reduce soybean acreage by 0.3 percent, based on an analysis of crop prices by agricultural broker and researcher Allendale Inc.
Corn may be sown on 91.492 million acres in the season that starts Sept. 1, up from 88.192 million last year, Rich Nelson, Allendale’s director of research, said today during a client conference in Crystal Lake, Illinois.
Soybean planting may drop to 77.144 million acres from 77.404 million, Nelson said.
Farmers can earn as much as $157 an acre more on corn than on soybeans in parts of the Midwest, the main growing region, Nelson said, citing data from the University of Illinois. Corn futures in Chicago have jumped 77 percent in the past year to the highest price since July 2008. Soybeans gained 48 percent. The U.S. is the world’s largest grower and exporter of both crops.
“The market is paying farmers to plant more corn,” Nelson said. “We will find more corn planted this year.”
Allendale conducts an annual survey of farmers in March to determine how much of each crop they intend to plant. the U.S. Department of Agriculture discloses its own survey on March 31.
The price of corn won’t reach a seasonal peak until farmers finish planting this year’s crop and the government releases its updated acreage forecasts on June. 30, Nelson said.
The Price Outlook
Corn futures for March delivery on the Chicago Board of Trade should rise 6.5 percent to $7 a bushel in the next few weeks, which will slow demand and provide more incentives for farmers to seed the grain on marginal cropland, Nelson said.
U.S. corn inventories before the 2011 harvest will fall to 745 million bushels, less than half the 1.708 billion bushels on hand before the 2010 harvest, USDA data show. U.S. reserves before the 2012 harvest may rise to 950 million bushels, because the increased planting and higher yields will offset increased demand for corn to produce ethanol, Nelson said.
Soybeans may rise 6.2 percent to $15 a bushel in Chicago, peaking before the USDA issues its acreage report at the end of March, said Bill Biedermann, a senior vice president at Allendale.
Global inventories of the oilseed on Sept. 30 will be 58.3 million metric tons, down from 60.2 million a year earlier, the USDA estimates. That’s the third-biggest pre-harvest stockpile on record, while U.S. inventories as a percentage of consumption will fall to the lowest since 1965, Biedermann said.
The U.S. Supply
“The market is focused on the shrinking U.S. supply instead of the rising global inventories,” Biedermann said. “The market may be surprised by higher U.S. soybean plantings,” because rising prices will increase the number of acres planted on less productive farmland, Biedermann said.
Combined inventories on Sept. 30 in China, the biggest global consumer, and Brazil and Argentina, the biggest exporters after the U.S., will be 88 percent of total world reserves, USDA data show. U.S. inventories will represent 6.6 percent of the total.