April 23, 2009

Soy prices soaring to six-month highs and planting delays around the US Midwest may cause some farmers to seed more soy this spring than they initially planned.

 

Soy prices have risen nearly 15 percent in the three weeks since the US government forecast 2009 soy acreage at 3.6 million acres below market expectations. The rise has been fuelled in part by China's strong demand.

 

Corn prices, by comparison, were down more than 3 percent during the same time period.

 

Analyst Darrell Jobman said that based on the prices, there is probably a little bit more inclination to go with soy this year because of price differential.

 

To be sure, many farmers already have invested in the fertiliser they need to plant corn and were committed to planting decisions they made months ago.

 

However, a late harvest in 2008 and a damp fall left many farmers unable to fertilise their intended corn acreage before winter, giving them flexibility about what to plant on those fields this year.

 

Soy will look even more attractive if planting delays around the Corn Belt begin to threaten total production. Corn planted after mid-May typically loses one bushel per acre for every day-seeding delayed.

 

Planting was already behind schedule in most areas. The US Department of Agriculture (USDA) said that corn planting was 5 percent complete as of April 19, well below the five-year average for late April of 14 percent.

 

Last year, when corn prices were 35 percent higher than current levels, farmers were doing whatever they could to plant as much as they possibly could, including running tractors through fields in muddy conditions and risking yield loss by seeding corn well into June.

 

But most forecasts for turning a profit with corn this year assume a good corn yield at harvest. Planting delays were causing farmers to make new calculations to determine if corn was still their best option.

 

Prices for new crop soy already rose past US$9 per bushel; a level most farmers assume will give them a profit, in most areas of the Midwest.

 

Grain dealers around the region said growers have been locking in that price for soy they will deliver in the fall for the past few weeks.

 

New-crop corn sales have been slower, as prices remained below the level growers have calculated they need to break even due to high input costs. Some farmers locked in prices for fuel and fertiliser at record highs last fall.