WASHINGTON, D.C. – “Shocking” planting intentions from a U.S. Department of Agriculture survey released March 31 buoyed wheat and corn futures and weakened soybean futures.
“Rarely do we get a USDA report that catches everyone leaning in the wrong direction, but we have that this morning,” said Dan Basse, president of research firm AgResource Co.
The consensus ahead of the annual prospective plantings report was that American farmers might boost their corn seedings and cut soybean plantings because of perceived higher returns from the new five-year U.S. farm bill, which was signed last year and took effect this year.
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Traders had expected a two percent increase in corn plantings and a corresponding two percent decline in soybeans. Wheat was expected to expand by 3.5 percent.
But the report estimated soybean plantings at 73.2 million acres, down only one percent from 2002. Corn area was about steady at 79 million acres. A smaller spring wheat area partly offset a larger winter wheat crop, resulting in a total acreage increase of two percent.
“When you look at it, soybeans have more upside potential than corn,” said analyst Emily French of the Washington-based consulting firm World Perspectives. Soybeans tolerate drought better than corn, which will face intense competition on the world market, she said.
Growers might see little market advantage from worries about a continued drought, she added.
Livestock feeders and grain processors seem confident of an abundant global supply even if one region runs short.
“The weather premium has been completely removed,” French said.
“The market more than anything, especially in wheat, has totally globalized.”
USDA estimated a seven percent decline in spring wheat, to 14.6 million acres. Winter wheat was up six percent, at 44.3 million acres.
The report is based on a survey of 75,000 growers during the first two weeks of March, the USDA said.
The figures might be overridden by skyrocketing fertilizer prices, fear of drought and worries about fuel supplies with war under way in Iraq.
“This potential drought is setting up in huge corn (and) soybean areas,” said Chris Hurt, Purdue University agricultural economist. Moderate to severe drought was common in the central and northern plains, stretching across the upper midwest.
The survey showed corn acres might migrate from the drier plains states to the wetter eastern corn belt.
A boom in ethanol production also was expected to bolster corn prices. USDA estimates a billion bushels of corn, roughly 10 percent of U.S. output, would be used in distilling ethanol this year.
