USDA’s planting intentions report gave the market quite a surprise last Friday. The USDA report predicts that corn acreage will total 78.019 million acres this year – down 3.7 million acres (5 percent) from last year.
Fewer acres coupled with the current strong demand for corn – more ethanol plants coming on line, feed usage is up and corn exports since Jan. 1 are ahead of last year’s pace – could fuel supply-side fears and push corn prices higher.
Because of rising energy costs, which hit corn growers in terms of higher fuel and fertilizer costs, crop analysts anticipated that there would be an acreage shift, but the amount of acres shifted was dramatic.
If planting intentions stay remotely close to those in the March report, there will be no room for error. "It would not allow for any weather challenges for corn," says Chris Hurt,
"This market (corn) will be very spooky going into the fourth of July this year," notes Bob Brown, independent market analyst, Edmond, Okla. "I do think we'll see a big change in planting intentions from the March report."
Just how big will depend on whether the futures market can build in enough of an incentive to persuade farmers to shift some soybean acreage over to corn plantings.
Also included in the report were planting intentions for soybeans. The USDA estimates that 76.895 million acres of beans will be planted this year. That’s an increase of 4.75 million acres compared to last year.