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Basis buying acres too

Agriculture.com Staff 04/17/2009 @ 8:05am

USDA's first projections of planted acreage put soybeans in the spotlight. Most traders had expected a ramp up in soybean acres as higher production costs and lower prices of corn would entice U.S. producers to switch heartily to beans. But, instead, U.S. producers indicated keeping their bean acres mostly unchanged from last year's total.

However, with the new acreage numbers, prices for new-crop beans have shot higher giving farmers more reason to re-think their planting decisions. Since the survey was conducted on March 1, soybean new-crop futures prices have jumped over a $1.14 a bushel, while new-crop corn prices are up approximately 25 cents a bushel.

In addition, new-crop basis levels have moved in sympathy with new-crop futures. Since the March 1 survey, new-crop soybean basis for fall delivery is up 9 cents a bushel while corn is up only 3 cents a bushel across the country. For corn, better gains have been experienced in the central Plains and the Mississippi/Illinois river market system.

For soybeans, new-crop basis improvement has been especially strong in the northern Plains and mostly flat to even slightly weaker in the eastern Corn Belt region of the U.S.

With farmers only just now starting to rev up their planters, there still remains a lot of uncertainty about actual acreage conditions for the coming year. Price changes in the futures and basis market have helped push more acreage to beans but will it be enough to entice a big shift in bean acres? Weather conditions may be more of a driver for final acreage numbers than prices with limited changes in relative prices of corn versus beans. With wet conditions in the northern Plains, it may be more likely that acres end up in soybeans that were previously expected to be corn.

USDA's first projections of planted acreage put soybeans in the spotlight. Most traders had expected a ramp up in soybean acres as higher production costs and lower prices of corn would entice U.S. producers to switch heartily to beans. But, instead, U.S. producers indicated keeping their bean acres mostly unchanged from last year's total.

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