The fall rally for new crop prices of corn, soybeans and wheat is shifting the dynamics of the grain markets for 2008 - again - according to the latest research from Farm Futures magazine. With futures at or near record levels, and input prices surging, farmer planting intensions are again up in the air.
Based on a survey of farmers conducted in late November and its own proprietary models, Farm Futures now estimates producers are planning to plant 88 million acres of corn in 2008, along with 69.5 million acres of soybeans and 62.2 million acres of wheat. By contrast, the magazine's August survey put corn at 84.9 million acres, soybeans at 72.6 million, and wheat at 59.8 million.
According to USDA, in 2007 farmers planted 93.6 million acres of corn, 63.7 million acres of soybeans and 60.4 million acres of wheat.
Farm Futures Senior Editor Bryce Knorr, who directed the research, believes good corn yields convinced many producers to keep planting that crop, despite tempting soybean offers. But soaring fertilizer prices and lack of supplies could force some farmers to put soybeans back into their rotations.
"The increase in wheat came mostly from winter wheat, thanks to a rally in September and October of more than $1 bushel in Chicago futures," says Knorr. "But Minneapolis September wheat may have to rise further to attract acres, because producers on the northern Plains told us they plan to cut back sowings in the spring."
Farm Futures will survey producers again prior to the March planting intentions report from USDA, and Senior Analyst Arlan Suderman expects more revisions then.
"Farmers are responding to market forces, and those market forces will likely change another time or two before the planters are finished doing their job this spring," says Suderman.
After that, weather should keep the markets volatile, he adds:
"Supply and demand estimates for all three major commodities rely upon trend yields in 2008 to keep the supply pipeline flowing smoothly. There will be little margin for error due to adverse growing conditions."
"As such, traders and producers both must pay particular attention to the intensity and duration of the current La Nina cycle in the equatorial Pacific and its impact on growing conditions in key crop-producing regions of the world.
"On the demand side, changes in the health of the global economy, either for the better or worse, also may have a significant of impact on prices, due to low global stocks and the massive quantities of speculative money that is currently feeding the commodity markets."
Farm Futures surveyed more than 750 producers from Nov. 16 to Dec. 3, with results released this morning at its annual Farm Business Management Summit in St. Louis.