Recently, the USDA released its preliminary or baseline numbers for the upcoming year. Perhaps most intriguing and surprising was a lack of significant change in corn acreage.

Many private firms have been estimating a 3 to 5 million switch from corn acres into other types of commodities, mainly soybeans. However, the report did not suggest this, which may mean that trendline yields could suggest a similar crop to last year. This would imply adequate carryout into 2007. Projected demand will be strong, as ethanol use increases.

Specifically, the USDA baseline numbers indicated corn planted acres at 80.5 million, versus last year's 81.8 million figure. Harvested acres is estimated at 73.2 million, versus last year's 75.1. Ultimately, this could provide support for soybeans, as most analysts had expected more than the USDA baseline figure of 74 million acres, versus 72.1 million last year. Obviously, these numbers are subject to (and will likely) change.

When it is all said and done, acreage figures will be whatever they are going to be. We do not anticipate a significant change, as both markets offer different advantages and disadvantages to switching out of rotation. Nonetheless, market participants will dispute acres figures for months. What really matters is one decent rainfall in July and another in August. As was evident last year, timely rains made for an above average crop. At 150 bushels per acre, a two million corn acre decrease equates to 300 million bushels. While we do not want to minimize this figure, we believe one good rain could be worth two to three billion bushels of corn, or a ten-fold change.

If you have questions or comments, please contact us at 1-800-TOP-FARM, ext. 129.

Recently, the USDA released its preliminary or baseline numbers for the upcoming year. Perhaps most intriguing and surprising was a lack of significant change in corn acreage.