June 30, 2010

USDA to boost size of corn and soy sowings

US farmers planted more corn and soy than initially planned after gentle spring weather, a government survey is expected to show on Wednesday (June 30), likely ensuring the biggest corn crop ever a bumper soy harvest.

Analysts expect a USDA survey of nearly 90,000 growers to show they planted 89.229 million acres of corn and a record 78.183 million acres of soy.

Both would be fractionally up from March. The last time the USDA surveyed farmers when growers said they would plant 88.798 million acres of corn, the second-largest plantings since 1945, and 78.098 million acres of soy, up less than 1% from the record in 2009.

"There is a potential for a record-plus crop out there," said analyst Mark McMinimy of Washington Research Group. "But the crop is not yet in hand. Everything is going to depend on weather in July and the first half of August."

While the report may be treated with some scepticism due to heavy rains in late June after the survey was completed, weather that could reduce the soy tally and curtail corn supplies, there is little doubt that markets are factoring in a supply surge.

US corn futures tumbled to a nine-month low on Tuesday (June 29), taking seven-day losses to nearly 10% as ideal weather builds expectations of bigger yields.

At the same time, the USDA is likely to report that corn stockpiles as of June 1 rose 8% from a year ago to 4.598 billion bushels, the highest in 22 years, underscoring the surplus heading into the coming crop year.

It is also expected to show soy stockpiles of 594 million bushels.

Earlier this month, USDA projected a corn crop of 13.37 billion bushels, topping the record of 13.11 billion bushels set last year, and a soy crop of 3.31 billion bushels, just short of 2009's record of 3.36 billion bushels.

Larger plantings would translate into slightly larger crops. However, further downgrades could be in the cards, as the acreage report tends to overstate plantings, the USDA said.

On average, corn plantings usually are 1.3%, or 476,000 acres, smaller than reported in June and soy are 1.9%, or 649,000 acres, smaller at the end of the year. Growers sped through planting this spring, enjoying clear weather for the first time in three years. Analysts such as Darrel Good of the University of Illinois said large changes in plantings were unlikely from March.

The acreage report also was expected to show wheat plantings of 53.825 million acres and cotton plantings of 10.85 million acres. In March, growers said they would sow 53.827 million acres of wheat and 10.505 million acres of cotton.