Frustrated by stubbornly high production costs and lower prices, farmers are ready to slash corn acreage this spring, fueling a record switch to soybeans, according to new Farm Futures research.
The magazine's annual planting intentions survey puts U.S. corn acreage at 82.46 million this spring, down 4% from the 86 million put in a year ago. Soybean acreage would soar to a record 80.73 million, up more than 6% from last year's 75.7 million.
"Some statistical models show corn holding acreage this spring because it remains profitable in some areas," says Senior Editor Bryce Knorr, who directs the magazine's exclusive surveys. "But in the real world, farmers tell us corn is just too risky to plant, because it costs so much more than soybeans."
Farm Futures Market Analyst Arlan Suderman agrees that planting decisions this spring will be driven by risk aversion, not the usual ratios of soybean to corn prices. "Farmers are reluctant to commit large quantities of capital to a crop during times of great economic uncertainty unless the market gives them a sufficient risk premium to make it worth taking the chance," Suderman says.
The magazine's third survey of 2009 planting intentions continued a theme uncovered during previous tallies, starting in August, when rising fertilizer costs began eating into corn acreage plans. The August survey showed no change in corn plantings, with soybean acreage at 78.5 million. By late November, corn acreage was down to 85.1 million, while soybean seedings swelled to 80.1 million.
"Not only spring weather but prices also could change these intentions, because farmers have shown they've become very adept in responding to signals from the market," says Knorr. He noted the survey found producers on the northern Plains ready to plant 13.92 million spring wheat acres, down from 14.1 million in 2008. "Severe spring flooding in North Dakota is predicted that could impact this number, too."
Once USDA releases its official survey estimate March 31, Suderman expects growing season weather to quick take over the market's attention, especially for corn.
"Normal yields will be essential this year, especially if demand continues to firm as I expect," he says. "However we see no looming weather threat on the horizon to suggest otherwise at this point. "
Knorr and Suderman will discuss the survey and prospects for prices this year during a special online video presentation of The Bear Pit. This program, modeled on the popular panel discussions held at past Farm Futures Management Summits, also will feature answers to questions from farmers. It will be available at www.FarmFutures.com/buzz later Tuesday.
Farm Futures surveyed 1,370 producers by email from March 1 to March 14.