Trend: U.S. farmers will plant more soybean and wheat this year and less corn and cotton.
Bloomberg.com describes why farmers are shifting the acreage planted in corn, cotton, wheat, and soybeans, based on a USDA survey. Excerpts below.
Link: Bloomberg.com: Worldwide.
A government survey showed growers will seed 74.793 million acres with soybeans, up 18 percent from last year, the USDA said today in a report. Spring-wheat planting will jump 7.8 percent, as corn acreage drops 8.1 percent, the USDA said. The forecasts sent corn futures to a record high on the Chicago Board of Trade, while soybean and wheat prices plunged.
Increased soybean and wheat planting may help refill dwindling inventories, while declining corn output may squeeze supplies available for ethanol makers, including Archer Daniels Midland Co. Prices for most farm commodities reached records this year on booming demand for food, fuel and animal feed.
Soybean, Corn Markets
Soybeans for May delivery fell the exchange limit of 70 cents, or 5.5 percent, to $11.9725 a bushel on the Chicago Board of Trade. The price reached a record $15.8625 on March 3, more than double a year earlier, after U.S. farmers last year planted 63.631 million acres, the fewest in 12 years, and demand increased for vegetable oil and meal.
Corn for May delivery touched a record $5.88 a bushel in Chicago, after the USDA said corn acres will fall to 86.014 million as growers make room for soybeans. Corn closed at $5.6725 a bushel, up 6.75 cents, or 1.2 percent. The price has gained 51 percent in the past year.
The rally in farm products has been bolstered in part by rising demand for fuels made from crops. President George W. Bush signed a law in December requiring a fivefold jump in renewable fuels by 2022. About 33 percent of U.S. corn will be used for fuel during the next decade, up from 11 percent in 2002, the USDA estimates.
After U.S. farmers last year sowed the most corn acres since 1944, they will replace some of that land with soybeans, which has outperformed corn in the past 12 months.
Cheaper to Grow
Soybeans also produce their own nitrogen fertilizer, making the crop less expensive to grow than corn.
Farmers who planted corn in the past two years also may rotate crops to soybeans to prevent diseases and pest infestation.
Less Than Expected
Analysts and traders were expecting a forecast of 87.3 million corn acres. Farmers last year seeded 93.6 million acres with the grain, according to the USDA.
The U.S. will be the largest producer and exporter of corn and soybeans in the marketing year that ends Aug. 31, the USDA said on March 11. Today's USDA forecasts were based on a survey of 86,000 farmers who were asked in the first two weeks of March about their spring-planting intentions.
Spring-wheat acres will increase 7.8 percent from last year to 14.333 million after the price of the grain more than doubled on exchanges in Chicago, Minneapolis and Kansas City, Missouri, the USDA said. Wheat futures rose to a record $13.495 a bushel in Chicago on Feb. 27 on speculation growers wouldn't produce enough to meet global demand. Wheat for May delivery fell 60 cents, or 6.1 percent, to $9.29 a bushel in Chicago.
The USDA said durum-wheat acres will rise 22 percent to 2.63 million on increased demand. High-protein spring and durum wheat are used to make food staples such as bread and pasta. A shortage after drought hurt crops in Canada and the northern U.S. in 2007 caused futures for spring varieties to surpass $20 a bushel in Minneapolis.