More Soybeans, Wheat; Less Cotton,Corn

123jump.com Staff
31 Mar, 2008
New York City

U.S. farmers are expected to improve their net income in the current year as commodities prices are expected to trade near record levels. In the latest plating report from the USDA, more farmers are expected to plant soybeans to take advantage of higher prices and battle rising costs of fertilizers. Corn planting will be lower but still near record levels as demand for the largest grain production by value, as demand for ethanol drives the economics.

[R]1:40PM Farmers looking to rotate crops and leverage the recent price increases expect to plant more soybean and wheat and less cotton and corn.[/R]

Farmers are expected to plant more soybean and wheat and less cotton and corn in the current season. Corn will still remain the main focus of U.S. grain agricultural output as ethanol production drive new demand.

Expected corn acreage is down from last year in most States as favorable prices for other crops, high input costs for corn, and crop rotation considerations are motivating some farmers to plant fewer acres to corn. Despite the decrease, corn acreage is expected to remain at historically high levels as the corn price outlook remains strong due in part to the continued expansion in ethanol production.

A preliminary survey of 86,000 farmers by the U.S. Department of Agriculture, Prospective Plantings, showed that farmers are expected to plant 74.80 million acres of soybeans, an increase of 18% from a year ago, lower corn planting by 8.1%, increase wheat crop by 7.8%, and cotton by 13% lower.

Increases of at least 800,000 acres are also expected in Indiana, Minnesota, and South Dakota. If realized, the planted acreage in Kansas, New York, and Pennsylvania will be the largest on record.

A sharp rise in soybean prices played a key role in swaying farmers to plant more of it. Soy prices rose to a record high in the first week of March to $15.86 per bushel. Corn futures in Chicago trading have surged 44% in the last one year of trading.

White spring wheat planting is expected to be rise by 8% to 14.33 million acres and durum wheat acres will rise to 2.63 million acres, up 22% from a year ago. Cotton acres are expected to decline to 9.4 million acres, 13% lower than 2007 planting. Soybean planting increase is expected to be largest in Iowa and Nebraska, up 1.25 million acres and 1.20 million acres from 2007, respectively.

Corn led all grain crops by value in 2007 with a record of $52.7 billion followed by soybean with $27 billion and wheat with $14 billion. The value of crop production in 2008 is estimated at $175.5 billion, is forecast to exceed its previous record in 2007 by $25.9 billion, a 17% increase.

The rise in commodity prices boosts gross farm income, which is forecast to rise 7.5% in 2008 and to be 38% ($103 billion) above its average over the prior 10 years (1998-2007). Production expenses are forecast to exceed their 10-year average by 34% ($71 billion), partially offsetting the rise in gross farm income. Net farm income in 2008 is forecast to be 51% ($31 billion) above its 10-year average.

In a separate inventory report from USDA at the beginning of March, corn stocks are up but that of soybeans and wheat are down. Inventories of corn increased 13% to 6.86 billion bushels, soybeans declined 20% to 1.43 billion bushels, wheat declined 17% to 710 million bushels, and durum wheat plunged 35% to 25.2 million bushel from a year ago.