Wouldn't you know it. Now soybean prospects are looking better. For most of the winter, analysts have touted corn's strong demand, only-adequate supplies and possible turnaround in prices. Some increase in U.S. corn acreage was expected.
However, most in the trade were also expecting an increase in soybean acreage or acreage at least little changed from a year. “Now we are seeing some switching to corn in northern Corn Belt states that were unable to get planted a year ago,” said Brian Basting, a commodity analyst with Advance Trading, Inc. Mid-South corn plantings are also up significantly from last year.
USDA's Prospective Plantings report released March 28 said U.S. corn growers intend to plant 79.05 million acres of corn in 2002, up 4 percent from 2001's 75.75 million acres. Meanwhile USDA projected U.S. soybean acres at 72.97 million acres, down 2 percent from last year's 74.11 million acres.
The lower-than-expected soybean acreage “is a little supportive,” Basting said. “We are seeing record soybean consumption during the first half of the crop year. Obviously, that's going to drop off as we move into South American harvest. But with only 73 million acres planted, we'll really place great emphasis on the growing conditions this spring and summer.”
An upward price movement in soybeans could be short-lived, Basting warns. “If we get a rally in soybeans or in corn as we get into planting time, my advice would be to aggressively take advantage of this opportunity.”
Another reason to price some soybeans early, according to Basting, is that historically there has been a strong trend for soybean acreage to increase from the March Prospective Plantings report to the June report to the final acreage report.
“The exception was last year, where we ended up with a smaller number due to planting delays. But it wouldn't surprise me to see the acreage number for beans increase 500,000 acres to 1 million acres as we move along, especially if we get a positive response to this report.”
Basting noted that the opposite trend has been seen in corn the last 10 years. “The higher numbers are seen in the March report and reductions later on. The Delta, where USDA has penciled in some increases, has gotten off to a sluggish start due to wet weather. They really need to get that acreage in by April 15, or they'll switch to oilseeds or alternative crops.”
In addition, a wet spring in the eastern Corn Belt and the South could lead to later corn planting and some switching to soybeans.
Basting said that the 3.3 million-acre increase in intended U.S. corn acreage continues a bearish stance for corn during March. “But I think a good bit of the bearish impact of the higher acreage has already been built into the market.”
September soybean futures settled 5 cents higher at $4.77 on March 28, while September corn closed 3 cents down at $2.15.
Wheat acreage (at 59 million acres) “is supportive also,” Basting said, “with the declining durum acreage, particularly into North Dakota where acreage is being switched into corn and beans. The dryness in the west is also a concern.”