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Soy Estimate Surprises Analysts

The number of acres farmers will plant with corn and soybeans this spring was far from settled by a government report on March 31, with prices, weather and input costs over the next month set to play a big role.

The surprisingly low U. S. Agriculture Department soybean plantings estimate sent soy prices soaring and some traders believe seedings could rise in response. But farmers have a preference for planting corn and the weather in the coming weeks could influence their decision.

Neither crop figures to be as profitable as it has been in the past two years even though crop prices are at historically high levels, because production costs are also high.

A 2.8 per cent decline in acres devoted to major U. S. field crops in 2009, according to the USDA, means farmers may increase seedings of both corn and soybeans if commodity prices climb into the spring.

But farmers will choose which of the two crops to plant based on how much rain the U. S. Midwest receives this spring, how soon they can begin spring field work and even which crop figures to offer the most stable yields.

“It tends to be more of an agronomic decision than an economic one,” said Joe Victor of commodity research firm Allendale Inc.

“The seed cost is higher for corn, the fertilizer cost per acre is higher, so you would assume they would like the soybeans. But the bottom line is that I think farmers get a little nervous about the yield variability,” he said.

In the first survey-based acreage report of the season, USDA projected 2009 soybean seedings at a record 76.024 million acres, up from 75.7 million in 2008, and corn acreage at 84.986 million, up from 86 million last year.

Analysts on average expected the report to show 79.622 million acres of soybeans and 84.411 million acres corn.

USDA conducted its survey during the first two weeks of March when many farmers had not yet made their final planting decisions, so those figures are sure to change.

USDA will release its final acreage report on June 30.


Farmers in the heart of the corn belt still have a few weeks before they begin worrying about weather-related planting delays as corn in the heart of the region can be planted as late as mid-May.

“If the weather would allow us to get into the fields in the next couple of weeks, you’ll probably see a few more corn acres. But if the weather delays us, with a lot of rainy weather and whatnot, that would favour soybeans,” said Robert Nielsen, extension agronomist at Purdue University in Indiana.

Wet weather tends to favour soybean seedings because corn planted too late in the season is left vulnerable to the hottest summer weather during its key pollination stage of development.

Farmers will also consider input costs when making final planting decisions, but input costs will only play a role in the short term.

“Those inputs are going to get locked in here fairly quickly. Everybody needs to make arrangements to get (fertilizer) applied. That may have an influence for a couple of weeks but they’re going to have to make a decision pretty quick,” said Darrel Good, professor of agricultural marketing at the University of Illinois.

Like grain prices, fertilizer prices have also declined from record highs last year but remain at historically high levels.


Recent history suggests USDA’s corn plantings estimate may increase while soybeans decrease from the initial projection.

That has been the case in each of the past five years, even if economic or weather factors appeared to favour the opposite.

Corn prices fell by about 40 cents a bushel between the March 2007 prospective plantings report and that year’s June acreage report while soybean prices rose by about 40 cents, but corn acres still increased and soy acres fell.

Widespread Midwest flooding and prolonged planting delays due to wet weather in the spring of 2008 resulted in the same pattern, despite excess spring moisture normally favouring soybean seedings.

Over the last five years, the corn acreage estimate has increased on average 1.74 per cent from March to June while the soybean estimate has decreased 1.5 per cent, according to Allendale’s Joe Victor.

“It’s pretty hard to beat those odds. I believe this paves the way for additional corn acres and even fewer soybean acres,” he said.



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