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Acreage questions

Agriculture.com Staff 05/21/2009 @ 2:21pm

Brains have been working overtime to get a handle on the shift of corn to soybean acres this year.

This thought process happens every year there is a weather issue. This year, it is assumed by market participants that acres will shift-one million acres less of corn, one million more of beans is a common thought. Another version involves more beans-two million acres or more-because of the slow planting of spring wheat.

Soybean acres may also be influenced by price. The Prospective Plantings report released March 31st contained data as of March 1st, which practically speaking means the survey was done the last few days of February. Soybean futures prices at that time were around $8.80 and new crop futures prices were $8.30-8.50.

That's a big contrast to today. Old crop futures have rallied $2.00 and new crop futures have rallied $1.80. The survey for the June 30th Plantings report will take place next week. Remember total acreage (planted to principal crops) was estimated in March to be down 7 million acres. Lower prices, tighter credit, recessionary fears-these are all possible reasons for a decline in acres. Beyond wet weather, maybe traders should also consider other economic factors in estimating bean acreage.

Export Sales

Weekly soybean export sales have been very strong and futures prices have continued to rally during May. The spread between old crop and new crop prices hovers around $1.50. The strong outright price and the strong bull spread have not done enough to reduce demand for old crop soybeans. The market continues on edge until some signal is given to suggest demand is being reduced or postponed till new crop supplies are available.

The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.

Brains have been working overtime to get a handle on the shift of corn to soybean acres this year.

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