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Revisiting acreage numbers

Agriculture.com Staff 05/17/2007 @ 1:32pm

Private analysis firm Informa released their latest acreage estimates, while the market was trading this morning. According to wire service reports, the firm estimated corn plantings at 90.6 million acres and soybean plantings at 68.3 million acres.

While the corn number was virtually the same as USDA's March 30th estimate, the soybean acreage was 1.2 million acres higher. Spring wheat and cotton acres were also very close to the USDA numbers. Perhaps the higher soybean acres come from winter wheat abandonment-wheat acres that were destroyed in the early April freeze and replanted to soybeans.

Of course, the natural thought progression is that the winter wheat crop may not be quite as large as the USDA's May estimate of 1.620 billion bushels. Or, at the very least, the USDA will need to decrease harvested acres in future reports. Right now, they are using historical abandonment rates in their estimate.

The potential larger soybean crop did not affect futures prices today, as the soybean market seems more concerned with the situation a year in the future, versus the crop currently being planted. Yes, the market is more worried about how many acres Brazil will plant this October-December and how much the US will plant in 2008.

The sharp rally in crude oil (up over $2.00 today) has also affected soybean oil prices, which have rallied to new contract highs. There is still a link between energy prices and agricultural prices, right now focusing on soybean oil.

THIS WEEK'S CASH MARKET: Anything that was written last week about surging basis levels is still valid this week. Since Friday, there has also been a change in the spread relationship between old crop and new crop contracts. The July futures contract has gained 8 cents on the December contract, moving from more than 5 cents under the December to 2 1/2 cents over the December.

The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.

Private analysis firm Informa released their latest acreage estimates, while the market was trading this morning. According to wire service reports, the firm estimated corn plantings at 90.6 million acres and soybean plantings at 68.3 million acres.

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