US farmers will plant more corn this year than had been forecast by the USDA in March due to high prices and demand from the ethanol sector but acreage will still be down from last year, analysts said.
Farmers planted almost 2 million more acres to corn than the Agriculture Department estimated in March, a Reuters poll of analysts showed. That would still be down 2 million acres from last year due to high energy and fertiliser costs.
"When you're investing $100,000 in an ethanol plant five miles from you, your mind just automatically goes to growing more corn," said Roy Huckaby, analyst for Chicago trade house The Linn Group, of the expected increase from March.
On Friday the USDA will release its June plantings and quarterly stocks reports.
An average of analysts' estimates pegged this year's corn acreage at 79.802 million, down from 81.8 million last year but up from the USDA March estimate of 78.019 million.
The analysts expect farmers to plant 75.125 million acres of soybeans this year, up from 72.1 million last year but below the 76.895 million estimated in March.
"Everybody is really buying into this ethanol optimism and I'm not sure the planting intentions in March were all that etched in stone," said Jerry Gidel, analyst for North America Risk Management Inc.
"And with the corn prices being pretty strong this spring, that helped boost corn acres, too," he added. Mother Nature also treated farmers kindly this year. Producers always shoot for an early corn planting schedule as it helps ensure maximum yields per acre.
"There was a big switch to corn acres because they were able to put the corn in the ground early," said Charlie Sernatinger, analyst for O'Connor and Co. Although soybean acreage jumped from last year, analysts said weather from now through August will be a more important factor for soybean prices than Friday's USDA report.
Soybeans go through the pod setting and filling stages in August and weather during this period is critical to yields. "Since it's going to be yields that really determine the production level rather than acreage, I think the reaction of the market is going to be fairly short-lived," said Anne Frick, oilseeds analyst, Prudential Financial.
Analysts also said farmers hiked their plantings of spring wheat this year as prices for the high protein wheat soared. "Back in May, we had a big rally led by Kansas City futures. It drove Minneapolis September futures well above $4.50 a bushel, which is historically very high," said Bill Nelson, analyst for A.G. Edwards.
The average of analysts' estimates pegged 2006 spring wheat seedings at 14.501 million, above last year's 14.036 million and above the USDA's forecast in March for 13.899 million.