CHICAGO (Reuters) - U.S. farmers, encouraged by lower fertilizer costs, will plant more acres to corn this spring than a year ago, while soy seedings will remain around the same as in 2009, grain analysts told the Reuters Food and Agriculture Summit in Chicago on Tuesday.
U.S. 2010 corn plantings were projected at 89.3 million to 91 million acres and soybeans at 76.5 million to 78.7 million acres. Last year, U.S. farmers produced record corn and soybean crops based on planted acreage of 86.5 million corn acres and 77.5 million soy acres.
Corn and soybean prices on the Chicago Board of Trade, spring weather, and shifting yield potential for both crops will as usual drive final farmer decisions on how many acres they will seed to corn and soy, the two largest row crops.
“The trade is leaning toward more corn acres and less soybean acres. But the surprise could be the other way around. Historically, the trade has underestimated soy seedings,” Rich Feltes, senior vice president of MF Global Research, said in a roundtable discussion at the summit.
Based on current conditions, Feltes estimated U.S. corn seedings at 89.75 million acres and soybeans at 78 million.
At its annual outlook forum in February, the U.S. Department of Agriculture projected 2010 corn seedings at 89.0 million acres and soybeans at 77.0 million.
But the USDA’s first estimate of U.S. corn and soybean seedings based on actual farmer surveys will be released on March 31. Until then, trade speculation about USDA’s planting forecast will affect CBOT grain markets.
The world grain trade uses the March plantings numbers and then historical yields until the August field surveys to project annual corn and soy production from the United States, the world’s single largest exporter of the key grains.
Dan Basse, president of consultancy AgResource Co in Chicago, told the roundtable he expects corn seedings at 89.3 million acres and soy at 78.7 million. But Bill Lapp, president of Omaha, Nebraska, consulting firm Advanced Economic Solutions, said he expects corn plantings to rise to 91.0 million acres, with soybeans at 76.5 million.
“I think we gained some acres this year just by virtue of not having as wet of a spring even with the early flooding. Secondarily, I think corn is favored in part by virtue of the lower input cost -- fertilizer costs have come down,” Basse said.
The 2009 U.S. planting season was plagued by cold, wet weather -- preventing some farmers from seeding all their intended acres. Though some northern Midwest rivers were near flood stage this week due to a quick snow melt, the analysts said precipitation for March is actually normal.
“Irrespective of all the headlines with the flooding, this is occurring 10 days to two weeks earlier than normal. If you look at Midwest precip for March as a percent of normal, we are essentially dodging a major bullet here,” said Feltes.
Analysts also said they expected Chicago Board of Trade prices for new-crop corn, soybeans and wheat to trend lower for the spring-summer period, provided Mother Nature cooperates.
“We’re basically chopping around, waiting for developments in the global recovery,” Feltes said.
Analysts pegged key support for December corn at $3.50 to $3.80 a bushel, versus Tuesday’s close at $3.96-3/4. November soybean support was pegged $8.50, down from $9.26 on Tuesday and December wheat at $4.75-$5 compared with $5.42-3/4.
“The market needs to reflect a move toward more corn acres and to assure the ethanol industry of supply. Whether that takes adverse weather or the report later this month -- I‘m not sure. But if I were to bet on that relationship, I think beans need to lose relative to corn,” Basse said.
Analysts said the government’s expected decision to boost the level of ethanol in gasoline to 15 percent from 10 percent was important but not expected until the summer -- too late for spring planting decisions. The move is also likely to face court battles from gasoline dealers and automakers over product liability issues.
Reporting by Christine Stebbins, additional reporting by Karl Plume, editing by Matthew Lewis