March 13, 2008

 

US grain acreage shifts, to be key market factors in spring

 

 

This year's record wheat, soy and soy oil prices likely will influence US producers to expand seedings of these crops while corn and other feed grains will lose acreage in 2008, said one grain analyst.

 

The US acreage shifts in 2008 will have an ongoing impact on the markets throughout the 2008-09 crop marketing year, said Jerry Gidel, analyst with North America Risk Management Services Inc. in Chicago, in a research note.

 

Soy plantings could rise 9.67 million acres to 73.3 million due to the substantial recovery in soy prices versus corn prices, record fertilizer prices, hefty chemical and seed costs, disappointing second-year corn yields and reduced borrowing costs when planting soybeans, Gidel said in the report.

 

Last fall's 1.8-million-acre-larger soft red winter wheat seedings in the eastern corn belt and the South probably came from corn acres, but these acres could boost double-cropping soybeans, the analyst wrote.

 

The price surge in February, when the 2008 revenue-insurance price level of US$13.36 per bushel was established, has added to his expectation of larger soy acres in the western corn-belt, Delta and Southeast, resulting in a higher number than the USDA's Ag Outlook Forum's 71-million-acre projection.

 

These larger soy seedings likely occur at the fringes of US corn country, he said.

 

However, this year's crop-insurance value of US$5.40 per bushel for corn likely will curtail massive switches to soy, particularly in the central portion of the Midwest, Gidel adds.

 

The winter spike in spring and durum wheat prices to more than US$20 a bushel should boost northern Plains seedings by 1 million acres to 16.45 million in the spring, bringing the total US wheat area to 63.6 million acres and leading to a slip in oats and barley area, Gidel forecasts.

 

Overall, high prices and the release of 2-million-acres-plus from the Conservation Reserve Program land could increase total US plantings by 4.17 million acres to 253 million for the major crops, Gidel says.