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Bryan Doherty: Acreage report important? Yes and no

Agriculture.com Staff 03/26/2009 @ 11:00pm

The much-anticipated acreage report due on March 31 will give the market, and for that matter the world, some idea of what U.S. farmers intend to plant in the year ahead. While this information may be important, the question is, does it have any real relevance? In most years probably not. In 2007, corn prices rallied significantly compared to soybeans in February and for many producers, it was an easy decision to plant more corn. The 2007 report confirmed this, but a price advantage scenario has not developed this year. Therefore, the acreage estimate for corn and soybeans, considering current prices as well as input costs for 2009, may be nothing more than a guess.

So what will matter to help farmers to decide what to plant? The most important factor affecting acreage this year may be planting conditions. If soil and weather conditions are near ideal for corn, and farmers make good progress, the likeliest scenario is that a farmer will not wait to plant beans but instead plant more corn. This depends on availability of fertilizer, seed and cost. However, at current prices, there is not a significant advantage when comparing November bean futures and December corn. Hard working progressive farmers will be fighting their inner self to not plant more corn if conditions are positive. History shows that early-planted corn has higher yield potential than late-planted corn.

Another factor is the perceived longer term picture. If energy prices rebound and elsewhere in the world a continuous move toward bio diesel is sustained, soybeans could experience a strong demand year, both domestic and abroad. On the other hand, the recent purchase of bankrupt ethanol plants is a signal that ethanol usage will remain strong. If the government does continue to push toward a 12% to 13% blend, this too could keep corn prices active. The point: Perceived demand could give one or both commodities a price boost. It is just a matter of timing.

Top Farmer's informal survey does suggest farmers may be leaning toward more beans in order to reduce some of the cost associated with corn. Yet, in the fourth week of March, we are not seeing any strong bias by producers who remain unsure of their planting intentions. Many are still waiting it out, looking for an economic advantage to make a decision. So, to go full circle, it may be weather and/or planting conditions that determine how farmers will plant in 2009 regardless of what the USDA Planting Intentions repot says on March 31.

If you have questions or comments, contact Bryan Doherty at Top Farmer, 1-800-TOP-FARM ext. 129.

The much-anticipated acreage report due on March 31 will give the market, and for that matter the world, some idea of what U.S. farmers intend to plant in the year ahead. While this information may be important, the question is, does it have any real relevance? In most years probably not. In 2007, corn prices rallied significantly compared to soybeans in February and for many producers, it was an easy decision to plant more corn. The 2007 report confirmed this, but a price advantage scenario has not developed this year. Therefore, the acreage estimate for corn and soybeans, considering current prices as well as input costs for 2009, may be nothing more than a guess.

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