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All eyes turn to late-March USDA report

Agriculture.com Staff 02/08/2008 @ 2:03pm

The U.S. acreage battle between corn, soybeans and wheat has been talked about and well-documented for months. On March 31, USDA will shine a huge spotlight on this battle with its Planting Intentions Report.

Each year, this is seen by the market-watchers as a very important report. Though it's a compilation of what producers intend to report, meaning they can and will change their minds by spring, the market takes it seriously.

This year, factor in the battle for acres due to domestic and international demand, and the stage is set for the agricultural equivalent of the Super Bowl.

Essentially, many analysts think the battle comes down to about 10.0 million acres that were planted to corn last year versus soybeans. Will those acres stay in corn, be switched to soybeans or wheat?

Matt Pierce, Futures International LLC, says the battle is centered around what the northern Corn Belt producers are going to plant.

"The nerve center of the battle is in Minnesota, the Dakotas, Wisconsin and even Montana, where you can choose between planting corn, soybeans, spring wheat, barley or canola," Pierce says.

"With Minneapolis spring wheat futures hitting above $18.00 per bushel, that crop is still getting beat out by deliverable soybeans, canola and barley. So, those northern producers will favor whatever crop they can plant early this spring. Under early planting conditions, corn is the favorite. Any type of planting delays favors spring wheat and soybeans," he adds.

So, once the acreage intentions are announced weather-watching becomes real popular this year, Pierce says.

If we don't get the spring wheat acreage, the U.S. may have to import it from Kazakhstan to meet current contract obligations, Pierce says.

Pierce is estimating 2008 corn acres to come in either side of 88.0 million acres, wheat either side of 65.0 million, and soybeans either side of 71.0 million.

Current trade expectations are the USDA soybean estimate will be above 71.0 million figure, corn below 88.0 million, and wheat below 65.0 million.

"If these numbers are realized, corn would skyrocket. The upside is another $1.00 for corn. And then soybeans and wheat will follow it up," Pierce says.

Informa Economics, a well-respected private analyst firm, estimated corn acres at 90.048 million, and soybeans at 68.97 million.

Vic Lespinasse, Illinois Grain, says the USDA's March report cannot be over-emphasized.

"There's an acreage battle going on. And the fact that the USDA is not allowing any early release of land out of the Conservation Reserve Program until 2009, the question is will there be enough acreage to go around," Lespinasse says.

In the past, the March 31 USDA report is always highly regarded by the market's psychology. Lespinasse says to keep in mind this is only the intentions of producers.

"It's always a big report. The actual planting estimates won't be out until June and it could vary. There could be a big switch in acres even in June," he says.

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