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Agricultural shares surge on USDA report

03/31/2011 @ 2:30pm

Agricultural stocks gained Thursday after the U.S. government forecast widespread increases in planted acreage in the coming year.

Encouraged by high prices, U.S. farmers are expected to increase corn acreage by 5% to 92.2 million acres this year, the second-highest planted area the country has seen since 1944, the U.S. Department of Agriculture said in its closely watched planting intentions report.

Acreage of cotton plantings in the U.S., the world's top cotton exporter, is expected to surge 15% from a year ago. Acres planted with all wheat varieties should expand 8% in 2011, the USDA said.

Investors saw opportunities in seed, fertilizer and farm-equipment stocks, particularly for companies that deal with corn, which requires heavier-gauge equipment and more fertilizer than some other crops.

In early afternoon trading, Deere & Co. (DE) was up 2.4% at $96.86 and Agco Corp. (AGCO) rose 2.2% to $55.33. Seed maker Monsanto Co. (MON) was up 2.5% at $72.59. Fertilizer maker CF Industries Holdings, Inc. (CF) soared 4.2% to $138.15, and herbicide and pesticide manufacturer Syngenta AG (SYT) was trading 1% higher at $65.42.

"The acreage forecast is obviously positive for incremental seed volume growth," said Tim Tiberio, a global agriculture analyst at Chardan Capital Markets. "On the crop-protection side, Syngenta should also benefit from incremental volume opportunities, albeit weather-dependent."

An increase in projected plantings was countered by the USDA's warning that grain supplies remain very tight, and grains futures rose in response.

Corn for May delivery climbed the daily 30-cent limit, or 4.5%, to $6.93 1/4 a bushel at the Chicago Board of Trade. Soybeans for May delivery jumped 36 1/2 cents, or 2.7%, to $14.08 1/2. Soft red winter wheat for May delivery soared 36 1/2 cents, or 5%, to $7.63 3/4.

Cotton futures on IntercontinentalExchange powered 2.2% higher on the day, trading recently at $1.9828 a pound for May delivery, after the USDA forecast fell short of expectations.

-By Leslie Josephs, Dow Jones Newswires; 212-416-4055; leslie.josephs@dowjones.com
--Tom Polansek in Chicago contributed to this article.
(END) Dow Jones Newswires
March 31, 2011 13:08 ET (17:08 GMT)
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