July 4, 2007

More US corn acreage may ease price pressure

The high corn acreage -- as reported by the US Department of Agriculture (USDA) -- is expected to place downward pressure on corn prices, unless weather conditions turn dry. This lower trend should provide support to feeder cattle and calf markets.

The USDA has revised its estimates for planted and harvested crops in the US as corn acreage this year is estimated to reach 92.9 million acres, up 18.6 percent on 2006 and the largest planted corn acreage since 1944. The revised forecast was 2.4 million acres more than the March planting intentions report. Previously, analyst pre-report average estimates indicated that 90.6 million corn acres had been planted.

The higher acreage devoted to corn - due to rising corn prices led by the booming ethanol industry - has come at the expense of soybean acreage. Soybean acreage is estimated to reach 64.1 million acres in 2007, down 15 percent from last year¡¯s record and well below average trade pre-report estimates of 67.8 million acres.