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Spring planting 2009: Weather, markets loom large over planting decisions, progress

Agriculture.com Staff 02/20/2009 @ 2:52pm

Even though you still may have snow in the driveway, the 2009 growing season is officially underway.

The corn is in the ground and the leaves are reaching skyward in southern Texas. Farmers in the Lower Rio Grande Valley of Texas are underway, with some farmers already well on their way to completion.

"Our corn is over half planted, and many growers are planting grain sorghum at this time," Webb Wallace, with RGV Ag Science, Inc., said late Thursday.

But, even with the first of the nation's corn planted and already out of the ground down south, it’s still too early to tell what will determine how much corn and soybeans are raised this year -- Mother Nature or the markets.

Commodity traders are gearing up for price variation in the spring to lure acres. John Tocks, a CBOT floor soybean trader, says the battle for acres should get underway before the end of March.

"The USDA Planting Intentions report at the end of March will give us an indication of any acreage battle," Tocks says. "We've also got all of those new insurance rules, fertilizer costs, and the corn/soybean price ratio that will weigh on farmers' planting decision."

The corn/soybean price ratio is determined by averaging the closing prices of the Dec corn and Nov soybean futures contract throughout the month of February. Insurance companies use that average price in determining crop insurance rates. Therefore, farmers use this ratio as a benchmark in their planting decision.

On Friday, with the November soybean futures at $8.28 per bushel and December corn futures at $3.86, the market today is showing soybean values at a 2:1.4 ratio vs. corn value. That ratio favors corn planting. The closer that ratio gets to 2:1 value, the market is telling the farmer to plant soybeans.

The ratio can vary depending upon the individual farmer's local county average price, whether he/she owns land or not, their credit rating at the bank, and where they live, one floor trader says.

Tock says there may be another planting scenario building that very few are talking about. "With a big crop last year, and the industry's image problems this year, a lot of Georgia's peanut acres could be switched to soybeans," Tock says. "You can't give away peanuts now."

Tock adds, "Those 1.0 million-plus acres are going to go to soybeans. In a market like this, that extra 30-40 million bushels could throw us from a bullish 200 million bushel carryover to a bearish 300 million."

Joe Bedore, FC Stone's CBOT floor manager, says farmers are hesitating on their planting decisions this year.

"I've had groups of farmers from Ohio and Iowa on the floor. They hesitate when I ask them which crop they will plant more of. Some say the same as last year, others say more soybeans than corn."

Bedore adds, "I thought it was a no-brainer they would plant more beans than corn. But I'm hearing hesitation. Plus, this soybean market keeps falling, so we'll see."

Even though you still may have snow in the driveway, the 2009 growing season is officially underway.

Planting in the southern U.S., like the Lower Rio Grande Valley of Texas, has been aided by dry weather, with some conditions threatening drought, according to Charlie Notis, ag meteorologist with Freese-Notis Weather, Inc., in Des Moines, Iowa. Some drought has been severe in the southern states, and in the near term, that crop-threatening trend will likely continue.

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