While the March 31 U.S. Department of Agriculture planting intentions report contained several surprises, a Kansas State University grain market analyst believes the United States won't see the dramatic drop in corn acreage the report indicated.
USDA projects a 6.5 million-acre drop in corn acres planted, based on the planting intentions of U.S. corn producers. However, K-State Research and Extension agricultural economist Mike Woolverton said actual acres planted won't be that much lower because market conditions have changed since the survey was taken a month ago.
“No one really believes we'll see those acres,” Woolverton said.
“Right now, producers can make more with corn.”
The report also predicted an 11-million-acre increase in U.S. soybean acreage. That sent shock waves through each market, with soybeans closing down their daily limit the day the report was released and corn prices reaching record highs on all contracts.
“I don't think we're to the panic stage yet,” Woolverton said. “I think we'll see more corn and fewer beans (than the report indicated). But things could happen between now and then.”
Woolverton said the difficulty producers are having getting into the field could keep corn acreage down. Corn planting is already behind schedule in some areas. Producers and investors will begin to breathe a little easier once some significant acreage has been planted, he said.
The soybean market, Woolverton said, may be a little more volatile. The United States has picked up more soybean export business due to a strike by farmers in Argentina. However, the strike is on a 30-day hiatus following political pressures surrounding a disruption in that country's food supply caused by the strike. Woolverton said the Argentine government has begun to show some willingness to negotiate with farmers, but the strike may not be over.
“I think after 30 days if the government has not relented, they'll go back on strike,” he said.
However, producers in Brazil are about halfway done harvesting what is expected to be a record soybean crop for that country. Brazil has started to take export business on the new crop, evidenced by a 50 percent drop in U.S. soybean exports for the week ending March 30.
But Woolverton said if the troubles in Argentina continue, it could boost U.S. soy markets.
“The strike is showing Argentina can be an unreliable supplier,” he said. “Buyers are starting to look around.”