U.S. farmers to plant the most corn in 75 years
WASHINGTON (Reuters) - U.S. farmers will plant the most corn in 75 years to cash in on higher prices, topping expectations at the expense of soybean and spring wheat sowings, according to a U.S. government report on Friday.
The dramatic expansion raised hopes that the next harvest would ease razor-thin supplies that have kept corn prices near historic highs.
The Agriculture Department, in a separate report, said supplies in storage as of March 1 were smaller than expected, making a big crop imperative.
"Going forward, it's going to be all about the planting weather," said Don Roose, president of U.S. Commodities.
Despite the early prospects for a bumper crop, Corn, wheat and soybean futures rose strongly on the surprisingly tight grain stocks. Corn for delivery in May went "limit up," rising by the maximum amount allowed in a day of 40 cents. The climb of 6.6 percent to $6.44 a bushel was the biggest gain for corn since Oct 11.
Soybeans were up 3 percent, to a six-month high of $14.02 a bushel, and wheat was up nearly 8 percent, the biggest increase since Oct 11.
FARMERS GEAR UP FOR BIG YEAR
The farm sector is enjoying a boom that dates from 2006 as food demand rose worldwide and biofuels helped spur crop production. With farm income at record highs, farmers have updated their tillage equipment and built more storage bins, making business for equipment makers like Deere & Co and AGCO Corp, seed companies such as Monsanto Co, bin manufacturers such as Brock Grain Systems, owned by Berkshire Hathaway, and processors such as Archer-Daniels-Midland Co (ADM).
The increase in corn acres and decline in soy acres is particularly positive for fertilizer producer CF Industries, which is weighted more heavily in the production of nitrogen fertilizer need to grow corn, said Jeff Stafford, equity analyst for Morningstar. Soybeans don't require nitrogen fertilizer. CF Industries was up 2.2 percent at 185.5, while rival fertilizer maker Mosaic was up just 0.3 percent at 55.43. Bunge Ltd, the world's top oilseed processor, could take a hit from the decline in soy plantings, Stafford said. However, grain companies also could make more money by transporting increased volumes of crops around the world. "For a grain trader like Bunge, they make more money from the higher volumes of food that are shipped," he said. Bunge was up 1.7 percent at 68.38, while ADM was up 1.4 percent at 31.7. Deere was up 0.5 percent to 80.90.
MORE CORN IN THE TOP CORN STATE
Another year of full-throttle output is on the horizon. USDA estimates growers will plant the largest area to the eight major field crops -- corn, wheat, rice, cotton, soybeans, sorghum, barley and oats -- since 1998 and up 2 percent from 2011.
In USDA's annual prospective plantings survey, farmers said they would expand corn planting by 4 percent from 2011, which exceeded analyst expectations or 94.72 million acres. Iowa, the No 1 corn state, would plant a record amount of land to corn.
Soybean plantings were projected to fall 1 percent nationwide from last year to 73.9 million acres, increasing concerns about tightening global supplies of the oilseed due to poor harvests in South America. Analysts had expected soy plantings to increase to 75.393 million acres.
"Acreage is expected to shift to corn," the USDA said. In many states, corn offers higher returns than competing crops.
In Iowa, corn planting would be up by 4 percent while soybeans drop 6 percent. Nebraska, No 3 in corn, would expand corn area by 5 percent while trimming soybeans by 4 percent and wheat by 11 percent. Illinois, No 2 in corn and soybeans to Iowa, would boost soybean area by 100,000 acres, or 1 percent, while cutting corn by the same amount.
LARGEST CORN PLANTINGS SINCE 1937
Big corn plantings should replenish a stockpile that is forecast to shrink to its lowest level since 1996 by the Sept 1 end of this marketing year. If farmers stick to their plans, it would be the most corn planted 97.2 million acres in 1937.
USDA estimated farmers will plant 12 million acres of spring wheat other than durum, with a record low number of acres seeded in South Dakota. That is down 3 percent from last year and below the average trade estimate of 13.313 million acres.
USDA's projection for a total wheat planted area of 55.9 million acres was up 3 percent from 2011 but well below the average analyst estimate of 57.422 million acres.
Growers intended to plant 13.2 million acres of cotton, down 11 percent from last year, and 2.56 million acres of rice, down 5 percent, according to the USDA report.
With normal weather and yields, the corn harvest would be a record 14.5 billion bushels, up 10 percent from the mark set in 2009, according to Reuters calculations. Soybeans would total 3.2 billion bushels, the fourth largest on record. The wheat harvest would be 2.1 billion bushels and cotton growers would pick 18 million bales.
The U.S. corn stockpile was down 8 percent from a year ago, the government said, with consumption running faster than traders expected.
In a quarterly report, USDA said there were 6.009 billion bushels of corn in storage on March 1, 2 percent less than traders expected. Some 3.6 billion bushels were consumed during the quarter, equal to 30 percent of the 2011 crop.
Traders estimated consumption would be 4 percent smaller than USDA estimated.
Soybean stocks were estimated by USDA at 1.372 billion bushels, up 10 percent from a year ago but 1 percent smaller than traders expected.
Wheat stocks totaled 1.201 billion bushels, according to USDA, down 16 percent from a year ago and 2 percent less than traders expected.
(Editing By Russell Blinch and Alden Bentley)