February 24, 2012

 

US planters to sow corn on record level

 

 

Since World War II, US growers will plant corn on the widest land area, according to farm officials.

 

The USDA is, at its Outlook conference, to confirm that its initial stab at 2012 corn plantings of about 94 million acres was in-line, traders believe.

 

Sowings at that level would be the highest since 1944, and represent a fourth successive year of increasing corn area, in response to the increased domestic use of the grain in for making ethanol, while expansion in foreign livestock herds has underpinned export demand.

 

They are expected to come in part at the expense of soy, for which traders expect a third successive drop in sowings to about 74 million acres, with cotton plantings and area set aside for conservation seen falling too.

 

The data are being especially closely watched because of their ability to predict the next big report in the calendar for 2012 crop estimates, at the end of next month, when the USDA reveals sowings estimates based on farmer surveys ahead of the spring sowing period.

 

There is a "growing focus" on today's numbers given their "increasing accuracy", Abah Ofon at Standard Chartered said.

 

"Last year the projections in the farmers' survey report for corn and soybean acreage, at 92 million acres and 78 million acres respectively, matched forecasts from the USDA annual Outlook."

 

The plaudit contrasts with criticism the USDA has attracted over its estimates for corn inventories, which critics believe are overstated, and could herald higher prices as markets impose a higher-than-foreseen level of rationing.

 

Expectations that the USDA will stick by last week's outline numbers, based on calculations made in November, reflect a consensus that farmers' profitability calculations favour corn over soy.

 

"These numbers have been bantered around by the trade for several months already based on economic projections, and trade is anticipating USDA to repeat these acreage numbers on Thursday," Kim Rugel at Benson Quinn Commodities said.

 

At Macquarie, Chris Gadd told Agrimoney.com said that US growers may be increasingly reluctant to plant successive corn crops, given that this practice is seen as a big contributor to a disappointing national yield last season, and means that "returns for farmers are not that good".

 

However, Gadd said he was "not expecting a surprise", given that there had been no major shift in the ratio between November soy and December corn on the Chicago futures market, a metric viewed as having a significant influence on growers' planting decisions.

 

Where analysts may take issue with the USDA is over yield assumptions, which may feed through into a huge harvest forecast, and expectations of a massive rebuild in inventories.

 

The department is expected to stick with so-called trendline yield forecasts of 164 bushels an acre for corn and 44 bushels an acre for soy.

 

However, many commentators have warned that falling corn yields in the past two seasons have raised questions over the accuracy of the trendline estimate.