(Agrimoney) – Investors appear to be trimming expectations for the growth US corn sowings this year, as a key report looms, with futures markets boost the incentive for farmers to raise plantings of rival soybeans.
Rabobank on Thursday forecast a rise of 1m-1.5m acres in US corn plantings, from the 88.4m acres seeded last year.
And separately, US-based Global Commodity Analytics, citing results of a limited farmer survey, pegged seedings at 89.4m acres.
Earlier this week, Societe Generale put corn seedings at 89.0m acres, while Informa Economics on Friady pegged area at 89.5m acres.
Although all these forecasts would see US farmers raise sowings of the grain for the first time in four years, the estimates are below the 90.0m acres at which the US Department of Agriculture pegged seedings in an initial estimate last month.
An Allendale report last week did come in with a more upbeat estimate for corn sowings, of 90.4m acres.
Corn vs soybeans vs wheat
The apparent trend lower in expectations for corn area comes ahead of a much-anticipated report next week, in which the USDA will update its forecasts using results from a farmer survey.
And it follows underperformance by new crop December corn futures, appearing to offer some financial incentive for growers to switch to other crops.
While December corn futures have appreciated by 2.7% this month, the key November soybean lot has risen by 5.0%, lifting the much-watched soybean:corn ratio to 2.37, from 2.32 at the start of the month.
A higher ratio is seen as encouraging farmers to sow soybeans rather than corn.
Minneapolis spring wheat futures for September have gained 4.5%.
Above production costs
However, commentators flagged too the support to corn as an option from reduced costs of production for a crop which has relatively high fertilizer needs.
“Even though corn prices are at multi-year lows, they are still above variable costs of production,” Rabobank said.
At Global Commodity Analytics, Mike Zuzolo said that the results of the group’s survey show that “lower nitrogen prices will keep corn acres ample”, even if below the USDA’s initial estimate.
The results came as Rabobank trimmed by $0.10 a bushel to $3.80 a bushel its forecast for spot Chicago corn futures in the April-to-June quarter, flagging the strong competition from South American exports, and the prospect for a rebound of 2m-3m tonnes in Ukrainaina shipments in 2016-17.
