U.S. corn acreage this year will be the second largest since 1944, as farm profits rise while increasing demand for food and fuel cuts world stockpiles. Soybean acres are forecast to drop while wheat will climb.
About 92.178 million acres (37.3 million hectares) will be planted with corn, up 4.5 percent from 88.192 million last year and exceeding the 91.751 million expected by analysts, the U.S. Department of Agriculture said today in a report based on a farmer survey. Futures have doubled in the past year in Chicago as the USDA said adverse weather and rising demand would slash world inventories to the lowest in four years.
“Even with the increase in acres projected this year, the demand is growing fast enough that we can’t have any weather problems,” said Charles Ring, who farms 7,000 acres in Sinton, Texas. Ring, 57, said he’ll raise more corn and cotton this year because of the higher prices, while cutting acres in sorghum.
Corn futures for May delivery jumped 30 cents, the most allowed by the Chicago Board of Trade, to close at $6.9325 a bushel at 1:15 p.m. local time after a separate USDA report showed lower-than-expected inventories. The 4.5 percent gain was the most in two weeks.
Stockpiles at the start of the month totaled 6.523 billion bushels, down 15 percent from a year earlier and less than the 6.688 billion expected by analysts, the USDA said.
Farmers will cut soybean acres by 1 percent to 76.609 million, the USDA said, close to analysts’ expectations. Total wheat acres may climb 8.2 percent from last year to 58.021 million compared with analysts’ expectations of 57.239 million. About 14.427 million acres will be planted with spring wheat, up 5.3 percent from last year, the department said.
Rising crop prices will lift U.S. farm income to $94.7 billion this year, the highest ever, the USDA said on Feb. 14. Global food costs reached a record last month, according to the United Nations. High food prices and corruption have spurred unrest in northern Africa and the Middle East, ousting leaders in Tunisia and Egypt, the world’s biggest wheat importer.
Soybean futures for May delivery jumped 38.25 cents, or 2.8 percent, to $14.1025 a bushel in Chicago. Wheat futures for May delivery climbed 36 cents, or 5 percent, to $7.6325 a bushel.
Soybean prices have advanced 50 percent in the past year, while wheat jumped 64 percent.
Stockpiles of soybeans as of March 1 dropped 1.7 percent from a year earlier to 1.249 billion bushels, the lowest for the date since 2003, the USDA said today. Wheat inventories increased 5.1 percent to 1.425 billion bushels.
Farmers are planting more corn because price gains for that crop have outpaced increases for soybeans and wheat, said Darrel Good, an agricultural economist at the University of Illinois at Urbana-Champaign. Growers in central Illinois can make about $189 more per acre on corn than soybeans on high-productivity farmland, the university’s data show.
This year’s corn acreage will be the second highest in 67 years, trailing 2007, USDA data show. Acres may increase the most in South Dakota, Iowa and North Dakota, the department said. Parts of North Dakota and South Dakota have more than 9 inches (23 centimeters) of snow on the ground, threatening to delay planting, according to the National Weather Service.
“If the weather is sour in the Dakotas, and that corn acreage doesn’t get planted, it may go to beans or maybe something else,” said Hussein Allidina, the head of commodity research at Morgan Stanley in New York.
Farmers will plant 3.018 million acres with rice, down 17 percent from 2010, the department said. Oats acreage may fall 9.5 percent to a record low 2.839 million.
The USDA acreage estimates were based on a nationwide survey of 85,000 farmers taken in the first two weeks of March.
The amount of corn used to make ethanol may climb this year to a record 4.95 million bushels, about 40 percent of the 2010 crop, and demand from food processors and livestock producers also is growing, USDA data show.
“We’ve pulled down our safety stocks, so we’re dependent upon a good crop,” said Kelly Wiesbrock, a portfolio manager with San Francisco-based hedge fund Harvest Capital Strategies, which manages about $1.3 billion. “I don’t want to sound alarm bells, but we’re definitely more susceptible to supply-side shocks, if we have a bad corn crop this year in the U.S.”
Overseas purchases of agricultural products from the U.S., the largest exporter of corn, soybeans, wheat and cotton, jumped 18 percent to a record $115.81 billion in 2010, the government said earlier this month. China became the largest market for U.S. farm goods for the first time, as shipments increased by 34 percent to $17.5 billion, the data show.
Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, government figures show. Soybeans ranked second at $38.9 billion, and wheat was fourth at $13 billion, behind hay. The U.S. is the largest exporter of corn, wheat and soybeans.