While the March 31 U.S. Department of Agriculture planting intentions report contained several surprises, a Kansas State University grain market analyst believes the U.S. won't see the dramatic drop in corn acreage the report indicated.
The report predicted a 6.5 million-acre drop in corn acres planted, based on the planting intentions of U.S. corn producers. However, K-State Research and Extension agricultural economist Mike Woolverton says he believes actual acres planted won't be that much lower because market conditions have changed since the survey was taken a month ago.
"No one really believes we'll see those acres," Woolverton says. "Right now, producers can make more with corn."
The report also predicted an 11-million-acre increase in U.S. soybean acreage. That sent shock waves through each market, with soybeans closing down their daily limit the day the report was released and corn prices reaching record highs on all contracts.
"I don't think we're to the panic stage yet," Woolverton says. "I think we'll see more corn and fewer beans (than the report indicated). But things could happen between now and then."
Woolverton says one factor that could keep corn acreage down is the difficulty producers are having getting into the field. He says corn planting is already behind schedule in some areas. Producers and investors will begin to breathe a little easier once some significant acreage has been planted, he says.
The soybean market, Woolverton says, may be a little more volatile. The U.S. has picked up more soybean export business due to a strike by farmers in Argentina. However, the strike is on a 30-day hiatus following political pressures surrounding a disruption in that country's food supply caused by the strike. Woolverton says the Argentine government has begun to show some willingness to negotiate with farmers, but the strike may not be over.
"I think if after 30 days the government has not relented, they'll go back on strike," he says.
However, producers in Brazil are about halfway done harvesting what is expected to be a record soybean crop for that country. Woolverton says Brazil has started to take export business on the new crop, which he says is evidenced by a 50% drop in U.S. soybean exports for the week ending March 30.
But Woolverton says if the troubles in Argentina continue, it could boost U.S. soy markets.
"The strike is showing Argentina can be an unreliable supplier," he says. "Buyers are starting to look around."