March 30 (Bloomberg) -- U.S. farmers will sow the most acres of corn since World War II and cut soybean plantings after record ethanol production boosted grain prices to a 10-year high, a government survey showed.

Corn acres will rise 15 percent from last year to 90.454 million, the most since 1944, the U.S. Department of Agriculture said today in its annual spring-plantings report. Soybean acres may fall 11 percent to 67.14 million, an 11-year low. Analysts in a Bloomberg survey expected a 12 percent increase in corn acreage and an 8.4 percent drop in soybean plantings.

Farmers are moving acres to corn to take advantage of a 74 percent jump in futures in the past year, which spurred meat producers such as Tyson Foods Inc. to raise prices and cut margins for grain processors such as Bunge Ltd. Weather and commodity price swings may alter the actual acreage figures.

``Economics dictated plans for the massive shift to corn, but now we have to worry about weather,'' said Jim Stephens, president of Farmers National Commodities Inc., an Omaha, Nebraska-based company with more than 1.1 million acres under management, before the report. ``Saying you want to plant more acres is very different than actually planting the seed.''

Corn for May delivery fell the exchange limit of 20 cents, or 5.1 percent, to $3.745 a bushel at 11:33 a.m. on the Chicago Board of Trade after the USDA's acreage estimate exceeded analysts' forecasts. Futures reached a 10-year high of $4.5025 on Feb. 22. The USDA will update crop data on June 29.

May soybeans fell 6.75 cents, or 0.9 percent, to $7.715 a bushel. Before today, soybeans had gained 34 percent in the past year on expectations farmers would reduce acreage this spring.

`Bearish' for Corn

``When you see a 9 in front of the figure in that acreage it's psychologically bearish, compared to if it was 89.9, said Jason Britt, an analyst at Central States Commodities Inc. in Kansas City, Missouri.

The USDA report, released in Washington, is based on a survey of the planting intentions of more than 86,000 farmers during the first two weeks of March.

U.S. farmers harvested 10.535 billion bushels of corn last year, the third-largest crop ever, after planting 78.3 million acres. Soybean production rose 4.1 percent to a record 3.188 billion bushels in 2006 compared with 3.063 billion in 2005. The U.S. is the biggest producer and exporter of both crops.

Corn Returns

For corn, ``expected acreage is up in nearly all states as high corn price are encouraging farmers to plant more acres,'' the USDA said in the report. Farmers can expects to make about $150 more per acre from planting corn than soybeans, Stephens said.

The increased acreage signals this year's corn harvest will likely rise to a record, topping the prior peak of 11.8 billion bushels in 2004, analysts said. The USDA on March 2 forecast that demand for corn will rise 4.8 percent to 12.325 billion bushels in the marketing year that begins Sept. 1 compared with 11.76 billion this year, as ethanol consumes more of the harvest.

About 20 percent of last year's crop will be used to produce ethanol in the market year that ends Aug. 31, the USDA predicts.

Ample supplies of corn will improve livestock and poultry feeding margins for Tyson Foods and Smithfield Foods Inc., the largest U.S. meat producers. Cargill Inc., Archer Daniels Midland Co. and other processors who use corn to make animal feed, fuel additives and sweeteners also will benefit from increased inventories.

Food Inflation

Today's report may also may have a moderating effect on food prices, which the U.S. Department of Agriculture earlier this month predicted would rise 2.5 percent to 3.5 percent this year, an increase from 2.4 percent last year, partly on higher corn costs.

Warm, dry weather in April is needed for the corn crop to be planted before May 10 in the Midwest to avoid yield losses from heat in July and August and possible freezing temperatures in September.

``The weather will trump the acreage report because it will determine the ultimate size of the crop,'' said Thomas Uhlmann, a floor broker for Goldenberg Hehmeyer & Co. in Chicago. ``We are still in spring training -- now the weather season begins.''

Corn acreage is also rising in parts of the U.S. that usually plant wheat, rice and other grain and oilseed crops, the USDA said.

Wheat

Farmers said they would reduce spring wheat acreage 7.3 percent to 13.81 million acres from 14.9 million last year. The durum wheat acreage projection is up 6.4 percent to 1.99 million acres from 1.87 million last year.

Wheat of all varieties will take up 60.3 million acres, up 5.2 percent from 57.344 million last year when seedings were the second lowest since 1972. The acreage includes 44.51 million acres seeded with winter wheat seeded in October and November.

Wheat for May delivery fell 25.5 cents, or 5.5 percent, to $4.355 a bushel in Chicago. Before today, prices had dropped 17 percent since reaching a 10-year high in October partly because of increased planting of winter wheat in the U.S. and in other nations across the Northern Hemisphere.

The U.S. corn crop was valued at $33.8 billion in 2006, with soybeans second at $19.7 billion, government figures show. Wheat is the fourth-biggest crop, behind hay, at $7.7 billion.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net.

Last Updated: March 30, 2007 12:56 EDT