The drop in projected U.S. soybean acreage is “the big number,” concluded three analysts commenting on the newly released USDA planting intentions report March 30. They are: Brian Basting, commodity research analyst for Advance Trading; Jim Bower, owner and president of Bower Trading, Inc.; and Jerry Gidel, president of Midland Research, Inc.
U.S. soybean plantings are projected to fall 11% to 67.14 million acres, an 11-year low, USDA reports. At about 8.38 million acres less than last year, this was much larger for the 6-million-acre drop largely anticipated by the trading community, the Chicago Board of Trade-sponsored panel said.
“The bean number is bullish to wildly bullish; it caught the market by surprise,” Bower said.
The soy market has a big job to do over the next six months, analysts agree, to supply enough beans. Factors influencing the bean market ahead include continuing global demand for protein, a bountiful South American crop, and a too-strong Brazilian real value relative to the dollar, the analysts said.
“Projected corn acreage is above trade expectations; the market did its job,” Bower added. “It knew it had to buy more acres; it got the acres that it wants to satisfy global demand.” USDA announced 2007 intended corn plantings of 90.5 million acres, up from 78.6 million in ’06.
If corn farmers carry through on these intentions, it will be the largest corn acreage since 1944, when producers planted 95.5 million acres. The June 29 report will provide a clearer view of 2007 corn acreage.
“We will definitely need good yields for this year,” said Gidell. “Using 152 bu./acre as a yield average, we will need very timely planting.” Planting a tremendous amount of corn by May 15 “will be hard to do on a timely basis,” Gidel added.
“The corn acreage numbers obviously indicate that areas beyond the Corn Belt responded to market signals. “The next 45 days will be very critical, getting the crop in the ground and safely through pollination.”
The National Corn Growers Association (NCGA) reports that Iowa farmers intend to plant 13.9 million corn acres, up from 12.6 million acres in 2006. If realized, Iowa farmers will plant the most corn in the country. Illinois farmers intend to plant a record 12.9 million acres this spring, up 1.6 million acres from 2006. Minnesota and North Dakota are the other Corn Belt states with record planting intentions this spring, NCGA said.
Several southern states are playing a big role in the increased acreage, NGA reported. Arkansas growers are expected to plant 560,000 acres in 2007, up from 190,000 in 2006. Louisiana farmers intend to plant 700 thousand acres, up from 300,000 in 2006. Mississippi corn producers expect to plant 950,000 acres, up from 340,000 acres last year.
We may be due soon for a year of sub-par corn yields, Bower pointed out. “For the past hundred years, we’ve had 2.5 years of each decade where corn yield has been 7.5% or more below the trend line,” he said. “So far this decade we’ve had one year below the trend line by that much. Sometime in the next few years the odds are high that one of those years will not be a high producing year. Even with this big corn acreage number, we are still going to have to have the yield.”
Obtaining corn crop inputs in a narrow planting window shouldn’t be a problem in the Corn Belt, Bower said, but “fringe areas” could see some logistical challenges.
When asked whether and how soybean rust could affect the tight U.S. soybean crop this year, Bower replied, “Our producers will have to be on top of it and learn from what the Brazilians have done (in controlling rust).” Many Brazilian growers have full-time agronomists and can handle the rust situation extremely well, he said.
“This is going to be a numbers year, opinions are almost worthless,” Bower said. “I am a little threatened with this La Nina situation. I have two of the best meteorologists telling me not to discount La Nina. Both have mentioned this cold wet scenario getting ready to come in the next two to three weeks that is indicative of La Nina.
Bower added, “This is going to be a numbers year, opinions are almost worthless.”
The effect of rapidly rising corn yields should help this year, Basking said. “In 2004 the record corn yield was 142 bu.; now we are at 160. If I’d said we’d have an 18-bu. increase in such a short time, you’d have laughed me off the stage.
“We have big potential for a good crop this fall but also huge volatility over the summer,” he says.
Much hinges on the weather the next 45 days, Basking says. “It boils down to how it gets planted, how it gets pollinated.” He urged corn growers to look at more than one year. “Look at ’08, input costs are rising; we will need a big corn crop for several years.”
If average trend yields of 152 bu./acre are realized, corn producers would be on track to produce 12.692 billion bushels in 2007, the largest crop on record, NCGA reported.
U.S. farmers harvested the third-largest crop ever last year, after planting 78.3 million acres. U.S. soybean production rose 4.1% to a record 3.188 billion bushels in 2006 compared with 3.063 billion in 2005. The U.S. is the biggest producer and exporter of both crops.