Monday, March 31, 2008

Farmers Signal Big Year For Soybeans

The results of the much anticipated survey by the USDA of 86,000 farmers has found that the number of acres of corn grown in the United States is projected to fall from 93.6 million acres last year to 88 million acres this year -- approximately what market analysts predicted. 13.2 million of those acres are projected to be planted right here in Iowa, down from 14.2 million acres last year. Farmers sighted several reasons for reducing overall corn acres such as high input costs and a desire to return to a more normal crop rotation schedule. Soybeans, on the the other hand, are projected to see 74.8 million acres planted nationally; up from 63.6 million acres planted last year.
One number to keep in mind with this realignment in ag. planting this summer is that two years ago in 2006 the United States planted 78.3 million acres of corn so the current numbers are still quite high and have the potential to sustain several industries as long as weather-related problems don't jeopardize the yields. What might be more interesting is to see in the coming weeks how commodity prices respond to the news. Corn seemed ready to go higher on the news as futures prices had already climbed into the mid $5 a bushel range. However, soybeans are considered quite volatile in this climate as a large soybean harvest this year could fill storage bins and, with a large crop projected to come out of Brazil this year, could push the price of beans lower.

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