US soy, wheat planting to decline over several years

 

 

US farmers will continue to plant fewer and fewer acres of soy and wheat over the next several years while corn acreage rises, according to a 10-year "baseline" forecast released Thursday (February 12) by the US Department of Agriculture.

 

The latest government estimate for soy acreage last year is 75.7 million acres and that, according to the new long-term forecast, will fall to 74 million acres this year and then 73 million acres in 2010. Soy acreage in 2011, according to the report, then drops to 72 million acres and then 71.5 million in 2012.

 

"Soy plantings decline over the next several years, but remain above 70 million acres as net returns remain favourable," the USDA said in an analysis of the new forecast.

 

Although the soy forecast shows a constant decline in planting, the acreage prediction is far stronger than the USDA predicted a year ago when it released its 2008 baseline. Then USDA was also predicting a yearly decline, but the forecasts never went over 70 million acres beyond 2008.

 

The USDA's annual "baseline" forecast is done to provide a basis for the USDA's budget request to Congress. The forecast is actually put together about three months prior to its public release, but it's still highly anticipated by analysts seeking long-term predictions.

 

The 2009 baseline forecast also lays out a year-after-year decline in how many acres farmers plant with wheat. Planting this year is expected to drop to 60.5 million acres, down from 63.1 million in 2008, according to the report.

 

"Wheat plantings decline from the high level of 2008 as producer returns are lower," the USDA said. "Wheat acreage falls below 60 million acres in the longer run as weak demand growth reduces the crop's competitiveness for land relative to other crops."

 

The US ethanol industry continues to expand its consumption of corn, prompting farmers to increase planting, according to the USDA report, but the expansion is not as strong as government economists predicted a year ago.

 

"While expansion in the ethanol industry continues, smaller gains for corn-based ethanol are projected, largely reflecting moderate growth in overall gasoline consumption in the United States," the USDA said.

 

At one point last year the USDA was expecting ethanol refiners to use 4 billion bushels of corn, but that 2008 estimate now stands at 3.6 billion. The new USDA baseline does eventually see ethanol corn consumption rising above 5 million bushels, but not until 2018.

 

Ethanol producers are predicted to consume 4.2 million bushels of corn this year, 4.3 million in 2010 and 4.425 million in 2011.

 

As for corn planting, the acreage forecasts rise over the coming years, but not as quickly as was projected in the 2008 baseline. Farmers are now expected to plant 88 million acres with corn this year and 89 million acres in 2010.

 

The baseline released a year ago by USDA predicted farmers would plant 93 million acres with corn in 2010.