Penton Agriculture Suggests More Corn, Less Soybeans

Kelly MarshallAgribusiness, Markets, Planting

PrintFarm Futures is Penton Agriculture‘s market-leading ag business resource and they are seeing a lot of red on the ledgers right now.  In fact their latest survey suggests farmers may react to the agriculture market by cutting back almost 2 percent of the crop acreage this year.  Of the major row crops, only corn and cotton are seeing gains– but with levels that are still below those of two years ago.  The USDA will be releasing their first Prospective Plantings on March 31.

The biggest reason for an increase in corn could be weather, as prevented planting across 2.6 million acres kept last year’s numbers low, although some farmers in the northwest Midwest harvested record yields in 2015 and may increase acreage for that reason.  Numbers for cotton are expected to rise almost 11 percent, a comeback after low prices and poor weather conditions in 2015.

However, Farm Futures sees cutbacks on soybean acres of about half a percent, following back-to-back record crops and yields.  Sorghum’s rise from last year when Chinese buying brought prices to record premiums over corn doesn’t look to hold for this year since a surplus in the market has lowered prices again.  Reports suggest sorghum acres will be cut by 13 percent.  The north Plains may plant less spring wheat and farmers growing high protein grain plan to cut acreage as well leaving wheat at 5.5 percent lower than last season.

“Cotton prices aren’t profitable either, but growers don’t have many alternatives that look good in 2016,” said Bryce Knorr, Farm Futures grain market analyst, who conducted the survey. “That’s why overall acreage could continue to fall among major crops again this spring.”

“Corn appears to be gaining ground by default, because farmers are a little more optimistic about rallies during the growing season, thanks to a lot of talk about potential for the El Nino to end soon. Our research shows that would increase potential for at least modest gains,” Knorr continued.

Growers put their average price target for 2016 corn at a futures price of $4.12. By contrast the average futures price target for soybeans was only $9.27, a dollar or more below break-even levels.

Farm Futures surveyed 1,246 growers from March 7 to March 23. Growers were sent an invitation by email, with results recorded by an online survey form. Over the last eight years, Farm Futures’ March survey has deviated from USDA’s corn estimate by an average of 1.2%. For soybeans, the deviation is 3%.

“Farmers are banking on rallies because they still have a lot of 2015 production unpriced,” says Knorr. “Growers told us they have more than 40% of last year’s corn still in storage, with 30% of the soybean crop still unpriced.”