USDA's prediction of a bigger soybean acreage than last year's whopper wasn't a big surprise.
But the March Planting Intentions Report had many traders scratching their heads and asking, "Where did all the total crop acres go?"
The confusion over that question was one of the factors that pressed corn and soybean prices lower during the first 10 trading days in April.
As the figures show (see printed article), total planted acreage would be 3.65 million lower in 1998 than U.S. farmers planted in 1997. Considering that 2 million acres are scheduled to come out of CRP this year, most traders had expected a planted acreage figure of 268-270 million.
We have heard several explanations and new projections for where planted acreage will end up.
First is the thought that much of the CRP land will stay in hay or pasture this year as new-crop prices dropped lower into the planting season. Some CRP landowners may be satisfied to take less income by renting out the land as pasture.
Second is that many wheat growers in Western states may use more summer fallow acres than they have since the early 1970s. One customer told me he may be better off to preserve moisture and reduce operating expenses than bet on the outcome with current new-crop prices.
Third is the projection that USDA's June report will show additional corn and soybean acres.
All the scenarios will likely develop to a degree.
Table 2 shows the NorthStar Soybean Acreage Analysis since 1989. Note that, in seven of the last nine years, the June survey has suggested more planted soybean acres than did the March Planting Intentions Report. The average increase from March to June has been 1.75%. That suggests 73.2 million acres of planted soybeans in 1998 - a 1.6% increase from last year and a new record.
Whether the final acreage will be 71 million, 73 million or somewhere in between, will be determined by spring weather. A late, wet spring like in '92 could shift even more acres to soybeans, while an early spring would likely increase spring wheat and corn acres at the expense of soybeans.
What to do: At NorthStar, our time-cycle analysis suggests a major change in trend the week ending May 15 or July 31.
If the bean market rallies into the week ending May 15, consider making more old-crop sales. If the market drops sharply into that week, wait with any cash or new-crop sales until mid- to late June.
USDA will release its first Crop Production Report May 12, and its Planted Acreage and Grain Stocks Reports June 30. All will be transmitted at 7:30 a.m. CDT. Our complete analysis and recommendations will be available at 8:30 on our Web site at www.north-star-commodity.com