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Who will win?

Some say corn is king, but soybeans and wheat -- typically considered as a largely rotational crop and the "stepchild of the grain commodities," respectively -- are gathering momentum toward what could shape up as a battle for U.S. acres in the coming year.

But, even though the fight may start between wheat and soybeans, don't count out a comeback by corn in the end, analysts and farmers say.

On Friday, USDA pegged this year's U.S. corn production at 13.2 billion bushels, a 25% jump from 2006. Conversely, the agency's soybean number -- 2.59 billion bushels -- is 19% down from last year, when the current soybean production record was set. Neither number was a surprise to market-watchers and, in fact, fell dead-on with trade estimates earlier in the week.

Friday's USDA Crop Production report -- the same one that, last year at this time, set into motion a bullish swing in the corn market -- does foreshadow the need for an acreage shift in 2008. But, which crop will see the greatest shift next year?

Just weeks ago, it seemed wheat may be poised to see the largest bump in acres, but analysts said this week that some key signs may indicate the tide is turning toward more beans. But, don't forget about corn.

"Prospects for a sharp decline in U.S. soybean stocks by the end of the 2007-08 marketing year suggest that an increase in U.S. soybean production, and therefore acreage, will be required in 2008," University of Illinois Extension economist Darrel Good said this week.

But, Good added that current soybean futures prices alone could be enough to drive a bump in bean acres. Even so, prices at current levels mean corn is still the highest bidder, profit-wise.

"There does appear to be a bit of a knee-jerk reaction by producers to plan for more soybean acreage in 2008 with November 2008 futures above $9.50," he said. "However, December corn futures at $4.25 suggest that corn is still potentially more profitable than soybeans in much of the Midwest."

After dry conditions hampered early planting conditions in South America weeks ago, moisture has caught up there, and so too has the progress of and outlook for the region's soybean crop. This, according to Peter Georgantones, owner of Investment Trading Services in Bloomington, Minnesota, is reason alone for the U.S. bean market to support acreage expansion in '08.

"The bean market's going to have to do its part to make sure we increase acres here," Georgantones said Friday. "South America is off to a really good start. They've gotten good rains down there. We have to plant many more acres to soybeans."

Whether or not U.S. farmers keep up with South America in terms of soybean production, Good says, won't be known until harvest begins in the southern hemisphere. Until then, U.S. farmers -- regardless of what they may have already planted -- can and will adapt to market signals once a clearer picture of South American production is painted.

"Forecasts of the acreage response in the U.S. before the outcome of the 2008 South American crop is more clear cannot be very accurate," he says. "While some production decisions have already been made, producers clearly demonstrated the ability for late-season acreage flexibility in 2007 when planted acreage of soybeans was nearly 3.5 million less than intentions reported in March."

With troublesome conditions for wheat growers around the world, buyers have looked to the U.S. for their orders in a big way in the past few months, making the red-hot market plenty of incentive for a bump in wheat acres.

Farmers are responding: According to production numbers released this week by the Chicago-based Linn Group, farmers will plant 65.4 million acres of wheat this fall, up five million from last year. Harvested acres are pegged at more than six million higher than last year.

But, with languishing export sales and resulting bearish pressure on the wheat market, the financial justification for more wheat acres may be drying up, according to Georgantones.

"Wheat needs some demand, and we're just not getting it," he said of export sales that on Thursday totaled just around 50,000 bushels for the week. "Given our wheat exports, that explains why wheat's down in the last month."

Georgantones adds he sees the high already in for old-crop wheat, but dry planting and post-planting conditions in parts of the Plains states still leaves room for the new-crop bulls.

"We have really dry areas in Colorado, western Kansas and Texas that produce a lot of wheat," he said. "They could really use a drink."

Yet another factor that could continue the trend of lighter wheat export sales, Georgantones adds, is near-$100-per-barrel crude oil. With its affect on freight costs, export sales could see a marked decline.

"This energy thing is really going to come into play when it comes to our export business," he says.

Thus far, farmers in some areas -- many where it isn't as common -- have planted more wheat acres this fall. Some have already forward-contracted wheat, while others who haven't are planting with the option to go back in with corn in the spring, says Leslie, Michigan, farmer Dallas Henney. There's a lot more wheat in his area of south-central Michigan, and it's coming mostly from corn acres.

"There's a huge increase in wheat acres in this part of the country. Will all those acres get harvested? Most farmers have probably sold wheat already, and they won't be tearing up their crop," Henney says. "It's a realistic possibility that you can see acres torn up, though. I know most farmers hate to tear up a crop, but if, in January, [USDA] comes out and says there are 10 million more acres of wheat planted next year, and wheat goes to $4.25, we could see those acres planted back to corn."

Henney adds he's planning on a 40-40 corn-soybean rotation for next year, with 20% of his acres in wheat. He says he feels comfortable with that rotation in place. "The bottom line is that, if I switch 100 acres here or there, at $4.25 or $4.30 December corn, it makes that look better," he says.

One key for farmers, says Alan Kluis of Minneapolis, Minnesota-based Kluis Commodities, will be to maintain close attention to marketing and input costs -- both of which will be volatile in '08.

"Corn, soybean and wheat farmers who control costs, produce a good yield and execute an effective marketing plan should do very well," Kluis said recently. "In farming next year, the rewards may be great, but so are the risks."

Some say corn is king, but soybeans and wheat -- typically considered as a largely rotational crop and the "stepchild of the grain commodities," respectively -- are gathering momentum toward what could shape up as a battle for U.S. acres in the coming year.

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