Farmers Rein In Bullish Hopes For 2012

Lower crop prices could mean fewer corn and soybeans acres than previous projections

Published on: Jan 5, 2012

ST LOUIS, MO -- Tightening profit margins and an uncertain global economic outlook are forcing farmers to reevaluate plans to increase corn and soybeans acreage in 2012, according to Farm Futures Magazine's latest survey of planting intentions. Results of the survey were released today at the beginning of Farm Futures annual Management Summit in St. Louis.

While growers still hope to increase corn seedings this spring, the magazine now estimates acreage at 93.6 million, down 300,000 from its first survey in August. That would be a 1.8% jump over the 91.9 million planted in 2011.

Farm Futures survey of 1,350 farmers nationwide showed soybean acreage could be down substantially from the summer, when prices were some $2 a bushel higher. The latest indications suggest soybean acres could be slightly lower than 2011 at 74.9 million, 2 million less than the August estimate.

"Corn remains the most profitable crop for Midwest farmers, but lower prices could bring less expansion," says Farm Futures Senior Editor Bryce Knorr, who conducted the survey. "Though most growers would like to plant more soybeans to improve rotations, at the end of the day money talks."

Wheat acreage could also see significant changes for 2012, especially with weather such an issue for farmers in recent years. Farm Futures estimates total wheat acres at 59.2 million, up 1% from its August estimate and almost 9% higher than 2011.

"The increase in wheat acres was no surprise," says Farm Futures Market Analyst Arlan Suderman. "Durum and other spring wheat acreage will try to return to normal levels in 2012 after a disastrous planting season in 2011. Meanwhile, unexpected fall moisture led Plains farmers to aggressively plant winter wheat to get a cover over their previously parched soils. They'll decide in the spring if it's more economical to fertilize and save the wheat for harvest or graze it off and attempt to plant a row crop."

Hard red winter wheat acreage rose to 31.6 million, up almost 9% from 2011, and 1.3 million more than the fall survey. But farmers in the eastern Midwest weren't able to plant as much soft red winter wheat due to delays harvesting other 2011 crops. The Farm Futures survey put soft red seedings at 7.5 million, down around 10% for 2011. With white winter wheat unchanged at 3.7 million, total winter wheat plantings could reach 42.8 million, up 400,000 from August and 2.2 million more than 2011.

USDA releases its first estimate of winter wheat seedings Jan. 12, when final 2011 crop corn and soybean production also are announced. The Farm Futures survey found only a slight change in soybean yields and production from USDA's last estimate. The average U.S. yield was pegged at 41.28 bpa, for a crop of 3.042 billion bushels.

Corn yields could fall around 1 bpa nationwide from the agency's last estimate. That would put the average yield nationwide at 145.75 bpa, for a crop of 12.228 billion bushels. The decrease is in line with the historical tendency from past years when the agency cut its forecast in November, says market analyst Suderman.

"The acreage projected for 2012 combined with forecasts for a lingering La Nina into the spring and dry soil profiles in the western Midwest suggests that volatility could be high again in 2012," Suderman says.

"A 5% shift in yield from trend levels would be tame compared to that past two years, but it could be feast or famine for the grain industry, swinging production by nearly 1.4 billion bushels. Dry soil profiles in the western Midwest could create the need for added risk premium in the price early this spring until forecasters get a better handle on the longevity of the current La Nina pattern."

While farmers worldwide focus on corn, fewer soybean acres could tighten soybean stocks. "How soon that happens will depend on global weather patterns, beginning with this year's South American crop," says Suderman.

2011 Crop Production

                        Production       Yield/ac

Corn                 12.228 billion     145.75 bpa

Soybeans           3.042 billion      41.28 bpa

2012 Crop Planting Intentions

Corn                 93.6 million

Soybeans          74.9 million

All wheat             59.2 million

Other Spring        13.8 million

Durum                  2.6 million

SRW                     7.5 million

HRW                   31.6 million

WW                      3.7 million

Winter wheat       42.8 million