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Weather trumps acreage report

Agriculture.com Staff 03/28/2008 @ 4:04pm

On Monday morning at 7:30 a.m. Central Time, the USDA will release the much-anticipated 2008 crop acreage estimates.

However, step back and keep the big picture in perspective. Corn and bean acres could switch by a few million acres. The real driving force behind this year's price movement will be weather.

We are not discounting the importance of the Acreage Report, but when taken into context, if corn acreage is down (let's say 2 million acres less than expected), this could equate to a change in production of 300 million bushels. Comparing this to a 13 billion bushel corn crop, it is a rather small percentage change. However, we do acknowledge that a 300 million bushel change, if taken directly from the carryout number, could mean a rather large percentage change on projected ending stocks. Weather events could change production by billions of bushels.

Once the acreage number is released after 7:30, it may take all of about 10 minutes before the second guessing begins. As an example, early March saw significantly higher energy and bean prices. Are these elements already factored into the bean acreage number or not? In addition, much will depend on spring weather as well. While it is probably too early to talk about planting delays, if you are in the Ohio Valley and have saturated soils, the idea of potentially switching corn to bean acres has at least entered your thoughts this past week. As spring wears on and weather permits (or does not permit) planting, that may have just as big an impact for farmers to change their minds for planting this winter.

With heightened volatility and increased limits, expect fireworks. In the end, one good rain in July could be worth 3 to 5 billion bushels of corn production. Monday's acreage changes, if any, could equate to about 10% of what weather could change for production in the year ahead.

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

On Monday morning at 7:30 a.m. Central Time, the USDA will release the much-anticipated 2008 crop acreage estimates.

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