American farmers intend to plant more corn than analysts anticipated, which could set the stage for a market- depressing harvest.
Growers told the U.S. Department of Agriculture that they plan to seed 92.2 million acres of the crop.
It is higher than the average pre-report trade estimate of 91.8 million acres.
“If they do get the weather and the yield looks like it’s coming mid-July, then all of the sudden these grains could make a real about-face and really head down,” said Errol Anderson, an analyst with ProMarket Wire.
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Grain markets will be “on pins and needles” until August, when they will have a good read on corn production.
Canadian grain growers are bullish and rightfully so, but Anderson is encouraging them to keep their guard up by using marketing tools to hedge their risks.
“These are really good prices. Don’t take them for granted,” he said.
“There is going to be some market drops of significance that will hit these markets, and they’ll hit us at the most unexpected times.”
The USDA report forecast a surprisingly high 14.4 million acres of spring wheat and 76.6 million acres of soybeans, less than the pre-report estimate of 76.9 million.
Chuck Penner, president of Left- Field Commodity Research, said markets largely shrugged off the prospective plantings report.
“This was probably the most anticipated crop report I’ve ever seen, yet for the soybean market and wheat market, it took a day and it was digested and it’s old news.”
Some of the more interesting findings were for the smaller acreage crops.
American farmers intend to plant 586,000 acres of peas, down 22 percent from 2010, which should strengthen already tight green pea markets.
Lentil plantings are expected to reach a record 710,000 acres, up eight percent from last year.
“That makes sense because they mostly grow greens, and green prices this year have done so much better than reds,” said Penner.
He advised Canadian growers to consider forward pricing some of their green lentil production because price weakness may be on the horizon.
Bean acreage is set to plummet 32 percent to 1.3 million acres as beans lose ground to competing crops such as corn and wheat. This, combined with frost damage to the Mexican crop, could result in tighter supplies than anticipated.
“If you’re a bit of a contrarian, maybe that’s an opportunity,” said Penner.
Large kabuli chickpea area is expected to fall 15 percent, which should support prices when combined with Mexico’s frost damaged crop.
U.S. producers intend to plant a record 1.61 million acres of canola, up 11 percent from last year. He said that had little impact on canola prices because it was overshadowed by the smaller than expected soybean crop.
Canada’s seeding intentions report will be released April 26.
