June 19, 2012

 

  

US corn plantings increased greater this year than the earlier estimate, as lower prices put off farmers from sowing cotton, Informa Economics said.

 

The influential analysis group raised by 700,000 acres to 96.8 million acres its forecast for US corn plantings this year - representing an increase of 7.7 million acres on-year.

 

The upgrade, to the largest area since the 97.2 million acres planted in 1937, reflects one of the first forecasts from a major analysis group in the run-up to a much-watched USDA report on June 29 on domestic crop sowings.

 

And it contrasts with expectations earlier in the year that revival in soy prices, compared with corn, over the spring had lured many growers to plant the oilseed instead.

 

However, Informa raised its estimate for soy seedings too, by 200,000 acres to 76 million acres, a rise of one million acres year on year.

 

The casualty was cotton, for which the sowings estimate was cut by one million acres to 13 million acres.

 

Many investors have forecast that the continued decline in cotton prices over the spring would make farmers think twice about sowing the crop.

 

Goldman Sachs earlier this week forecast "higher cotton prices in the near term, as we expect the USDA will lower its US acreage forecast on June 29".

 

Indeed, the impact of the data on cotton prices was to prompt a revival nearly to 71 cents a pound, for the December contract, before it settled back down to 70.77 cents a pound, up 0.2% on the day.

 

The data encouraged further selling in new crop corn futures, taking them to their intraday low of US$5.10 a bushel, down 1.1% on the day.

 

The report "has put additional pressure on the all of the markets this morning", Darrell Holaday at Country Futures said.

 

Prices had already been pressured by jitters ahead of this weekend's Greek elections, concerns which cost soy and wheat futures early headway too.

 

The Informa data imply sowings of corn and soy considerably higher than USDA forecasts from March of 95.9 million acres and 73.9 million acres, respectively.

 

Then group's forecast for "other spring wheat" non-durum varieties was kept at 13.5 million acres, also higher than the USDA estimate, of 12 million acres.

 

However, Informa believes growers, attracted by high prices, will sow an extra four million acres overall than the USDA's March report showed.