USDA Updates Corn / Soybean Acreage Estimates

Gregory Meyer reported yesterday at The Financial Times Online that, “A spring grain rally has prompted US farmers to plant more corn and soyabeans, raising the prospect of a supply deluge at the end of the year.

“The planting spree comes despite relatively low grain prices that have pinched farmers’ incomes. US crop receipts are estimated at $190bn this year, down a fourth straight year from $232bn in 2012.

“But a sharp, fleeting rally brought on by a worsening outlook for South American crops happened as farmers started their spring planting campaign. It spurred them to sow much more corn and soyabeans than they had signalled in March, the time of the last US Department of Agriculture survey.”

And Wall Street Journal writer Jesse Newman reported yesterday that, “If Midwest weather cooperates, farmers this year are expected to raise one of the largest corn crops on record after switching fewer acres than expected to soybeans.

“The move heaps more pressure on an agricultural sector already grappling with lower farmer incomes and sales of farm equipment and supplies.

“Corn futures fell almost 4% by Thursday’s market close and have slid by 18% from their peak earlier this month, while soybeans continue to rally.”

Ms. Newman noted that, “The U.S. Department of Agriculture estimated U.S. farmers have planted 94.148 million acres of corn, topping the 92.759 million forecast by analysts and the agency’s own March projection for 93.601 million.

“The additional corn came despite a steep rally in soybean prices, which analysts had expected to prompt a switch between the crops.”

Yesterday’s Journal article also pointed out that, “The USDA said farmers planted a record 83.688 million acres of soybeans this year, though that fell short of the 83.969 million forecast by analysts. The smaller-than-expected acreage estimate also comes as global demand for the oilseeds remains robust, putting the spotlight on August weather, which is crucial for determining yields. Analysts said strong U.S. yields will be required to satiate voracious global appetite for soybeans.”

A more detailed discussion of the USDA’s updated Acreage report from University of Illinois agricultural economists Darrel Good and Scott Irwin is available here.

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