U.S. farmers boost corn acres to 75-year high, shorting soy
WASHINGTON (Reuters) - U.S. farmers will expand their corn plantings by 4 percent this spring to the largest in 75 years, topping expectations due to surprise reductions in soybeans and spring wheat, according to a government survey on Friday.
Soybean prices jumped to hit their highest in six months, extending this year's rally after the Department of Agriculture said farmers would plant 1 percent less of the crop. Analysts had expected a rise in soy acres.
Nearby corn prices also climbed after separate data showed stockpiles fell 8 percent from a year ago, a bigger decline than analysts had expected.
The two pivotal planting and supply reports are likely to further shift concerns about global food supplies from corn to soybeans. The big corn crop means that grain is now expected to rebuild razor-thin inventories next year. Soybeans, a key source of livestock feed, are up 16 percent this year on fears that South American crops may be damaged by drought.
Overall acreage of the eight major field crops will rise 1.7 percent to the highest since 1998, according to the USDA's annual Planting Intentions surveys of farmers. But with arable land now running short, the market is focused more than ever on the acreage devoted to each of the country's key crops.
"The surveys overwhelmingly showed the idea we are going to get a lot more corn acres in," said Mike Zuzolo, president of Global Commodity Analytics & Consulting.
U.S. farmers will boost corn planting to 95.9 million acres, the most since 1937 and above analyst expectations for 94.72 million acres. Record amounts are expected to be sown in Iowa, Minnesota, North Dakota, South Dakota and Idaho.
Soybean plantings were projected to fall 1 percent 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.
Farmers are focusing on corn because prices remain lofty after reaching a record high last year on strong demand that drained supplies. The increase in plantings should boost supplies, which are expected to drop by the end of the crop's marketing year in September to the lowest level since the mid-1990s.
The focus now is on Mother Nature, as a continuation of the unusually warm conditions could favor an even larger corn crop.
"Going forward, it's going to be all about the planting weather," said Don Roose, president of U.S. Commodities.
OTHERS MAKE WAY
The data created a split in the corn market, with traders sharply pushing up prices for nearby contracts that represent corn left over from last fall's harvest because of the tighter-than-expected supply estimate.
The U.S. corn stockpile fell 8 percent from a year ago to 6.009 billion bushels of corn in storage as of March 1, about 141 million bushels less than traders expected after consumption rose more than anticipated in the quarter, according to the USDA's quarterly report.
But deferred corn contracts that represent the next harvest lagged because of the outlook for massive plantings. Traders were buying nearby contracts and selling deferred contracts in a practice known as bull spreading.
"This will be bull spread city," said Charlie Sernatinger, analyst for ABN AMRO.
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.
The acreage estimates implied a corn harvest of 14.5 billion bushels, a soy harvest of 3.2 billion bushels, wheat harvest of 2.1 billion bushels and cotton harvest of 18 million bales, according to Reuters calculations that assume a normal number of abandoned acres and normal weather and yields.
Traders estimated consumption of corn would be 4 percent smaller than USDA estimated. USDA surveyed 84,500 growers and all 8,900 commercial storage facilities to develop its figures.
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. Some 994 billion bushels were consumed since December 1.
Wheat stocks totaled 1.201 billion bushels, according to USDA, down 16 percent from a year ago and 2 percent less than traders expected.
Slightly more than half of the corn was held on the farm. USDA said it had a margin of error of 4.4 percent for the on-farm figure for corn.
Traders have faulted USDA's stocks figures during the past year and varied among themselves of the likely March 1 level. Strong demand for corn for exports and making ethanol were expected to eat into U.S. supplies, but some traders said the mild winter would reduce corn used for livestock feed.
(Editing By Russell Blinch)
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