Will King Corn be toppled by soybeans in US sowings programmes?


King Corn may, at last, be toppled in the US this year – with the grain set to be surpassed by soybeans in farmers’ sowings programmes, many investors believe, ahead of a key conference on US agricultural prospects.

The US Department of Agriculture, in outline forecasts for domestic 2018 sowings first released in November, pencilled in acreage of both corn and soybeans at 91.0m acres.

But when this data is revised at the USDA’s annual outlook forum, which starts on Thursday, many commentators believe that the data will show soybean plantings ahead of those of corn for the first time – citing the recent strength in prices of the oilseed.

‘Corn acres could suffer’

“Given 2017’s hefty soybean plantings, many were expecting a big swing back in US corn,” said Jerry Gidel at broker Price Futures.

“However, corn acres could still suffer from firm soybean prices on Argentine dry weather concerns”, besides potentially losing ground in more southerly areas to cotton and rice, given relative prices.

In the Plains, meanwhile, the market could see roses in barley, oats, and sorghum “substituting for higher cost corn seedings”, Mr Gidel said, forecasting that the USDA will at this week’s forum peg corn plantings at 88.77m acres – compared with 90.63m acres for soybeans.

In 2017, US growers planted 90.17m acres of corn, 30,000 acres ahead of soybean seedings, official data show.

‘Acres could slide a little bit’

Last week, Bert Frost, senior vice-president of sales at CF Industries said that the fertilizer group was expecting “89m-91m acres of corn, lower levels of wheat [year on year], higher levels of soybeans” this year.

And a Reuters poll put market expectations of corn sowings this year at 89.90m acres, below the 90.59m acres expected for soybeans.

Meanwhile, Patrick Bowe, chief executive at Andersons said that the ethanol-to-rail group was expecting “that growers will plant 87m-90m acres of corn in 2018, perhaps slightly below the 90m acres planted in 2017.

“Soybean planted acres are expected to be 90m-92m, compared to 90m acres planted last year.

“We haven’t seen any appreciation on the corn price. And acres, thus, could slide a little bit.”

Price dynamics

In fact, December corn futures, the key new crop contract, have, remained stubbornly below the $4.00-a-bushel mark seen as psychologically important to growers, with the contract on Wednesday at $3.96 ½ a bushel – a price in fact in line with that a year ago.

But then November soybean futures, at $10.29 a bushel, are actually not that far ahead of the year ago price – with the March average last year, used as the basis of insurance payouts, at $10.19 a bushel.

Indeed, at Chicago broker RJ O’Brien, Richard Feltes flagged that while he was hearing “more talk of higher soybean acres”, the popularity of the oilseeds was down to “lower cost of production”, with in fact farmers being offered “better returns for producing corn than soybeans”.

“Anything close to $4.00 for December futures should ensure steady or higher corn acres in 2018,” said Tregg Cronin at Halo Commodity Company, referring to the average price for February, which is used as a basis for crop insurance payouts.

Wheat factor

Nor is soybeans versus corn the only acreage battle worth focusing on, with the comparative appeal of the oilseeds versus spring wheat a key dynamics too.

And spring wheat futures have not, in fact, been fighting too hard to attract farmers, flatlining since August, which brought the end of a correction from summer highs reached on northern US drought fears.

“With the February insurance pricing period taking place right now, sub-$6.40-a-bushel Minneapolis futures versus $10.20-a-bushel soybean futures is no slam dunk hard red spring wheat will get the acres it needs,” Mr Cronin said.

“One needs to remember without a meaningful jump in acreage, the hard red spring balance sheet could decline even with normal yields and average demand.”


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