Record-high soyabean prices are expected to lure US farmers to make a huge shift away from corn production in 2008 and if the current cold, soggy weather pattern persists in key corn states, corn plantings may be cut even more dramatically than analysts now expect.
"It's still early, but it has to be a concern. The prospects of getting a late start or not getting the stuff planted early this year are there, with the wetter and cooler conditions, it keeps the soil temperatures down," said Shawn McCambridge, analyst for Prudential Financial.
US farmers always begin planting their corn crop before they sow soya, to attain maximum yields. A big corn crop is needed this year to meet the soaring demand from the energy/ethanol sector.
The US Department of Agriculture on Monday will release its hotly anticipated March prospective plantings report. An average of analysts' estimates pegged this year's corn acreage at 87.387 million, down a big 6.2 million or more than 6.5 percent from last year's 93.6 million, which was the biggest corn area in more than 60 years.
"All of the numbers are hugely important, this is the biggest report that USDA has ever put out," a veteran grains analyst said. Farmers planted corn "fence row to fence row" last year because corn prices had zoomed to decade highs as the demand for corn from the ethanol boom escalated while exports and livestock feeding kept humming at a rapid clip.
Since then, corn prices climbed even more to record highs, but soyabean prices also skyrocketed to record levels as an unprecedented acreage bidding war gained speed over the winter, making soya the new darling of US Midwest farmers.
"Everybody on the books is worried about corn and I deal with farmers as well as end-users, and the thing to remember is these numbers are a snapshot," said Daniel Bluntzer, director of research for Frontier Risk Management. Farm Futures magazine surveyed nearly a thousand growers and showed a huge shift away from corn acreage (down 5.9 million) to soya (up 8.2 million).
"Farmers once again showed they're ready to respond to the market's signals," said Farm Futures Senior Editor Bryce Knorr. "And the market is telling them to plant more soyabeans due to very tight projected September 1 supplies in the US" The market may be telling farmers to plant soyabeans but planting weather will be the big swing factor.