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Archive for Saturday, March 31, 2007

Corn prices drop after report

Farmers expected to plant largest crop since 1944

March 31, 2007

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— Driven by demand from the ethanol and cattle feeding industries, Kansas farmers joined growers across the nation in plans to plant the biggest corn crop since 1944, a report released Friday showed.

Commodities markets responded to the larger-than-anticipated corn plantings, with corn prices quickly dropping 20 cents a bushel, hitting the limit and stopping trading for the day, said Mike Woolverton, grain marketing economist at Kansas State University.

Nationwide, farmers plan to plant 90.5 million acres, a 15 percent increase in acres, the Agriculture Department said in its prospective plantings report.

An estimated 3.7 million acres of corn are expected to be planted in Kansas, up 10 percent, the report said.

Woolverton said he expected corn prices to fall for a while, but he believes they will recover once traders know how many corn acres actually are planted, noting wet conditions in the major corn growing areas could keep farmers out of the field.

If it is too wet for farmers plant corn seed in time this spring, he said, those anticipated corn acres may shift to soybeans or spring wheat.

"Now that the prospective planting report is out, everybody is going to start looking at weather. This will be a weather-driven market from here on out," Woolverton said. "We are looking at planting conditions that may be difficult. Even though this corn number is large, it may not all get planted."

In Kansas, the increase in corn acreage comes mostly at the expense of fewer acres for soybeans, sunflowers and cotton this spring:

¢ Soybean acres were down 24 percent to 2.4 million acres.

¢ Sunflower acres were down 14 percent to 120,000 acres.

¢ Cotton acres in the state are forecast to fall 39 percent to 70,000 acres.

Soybean plantings were down more than traders had anticipated, and while soybean prices still dropped a little along with other commodities, Woolverton said he expected soybean prices to increase next week and the rest of the year because of the smaller crop.

Other crop acres in Kansas were expected to remain unchanged from last spring or were up slightly:

¢ Milo acres were up 2 percent to 2.8 million acres; Kansas is the nation's largest milo producer.

¢ Barley acres were un-changed at 24,000 acres.

¢ All hay acreage was up 11 percent to 3.4 million acres.

Acreage for the state's winter wheat crop, which was planted in the fall amid high prices, were up 5 percent to 10.3 million acres. Kansas produces more wheat than any other state in the nation.

The Agriculture Department has estimated farmers will plant 60.3 million acres of wheat nationwide, up 5 percent from a year ago.

The spring plantings report is still closely watched by winter wheat growers because it gives the first official indication of how many more acres of wheat will be added to the marketplace from states where wheat is planted in the spring.

The report pegged spring wheat plantings at 13.8 million acres, down 7 percent from a year ago, a much smaller drop than most analysts had expected, Woolverton said.

But some farmers could end up growing spring wheat instead of corn if they can't get into their fields early enough.

"This is going to be an interesting spring because of the weather situation," Woolverton said. "The situation could change week by week."

The larger wheat acreage, with nearly ideal wheat-growing conditions, could yield a bumper crop, and wheat prices immediately fell Friday after the report's release.

Nationwide, the winter wheat area was up 10 percent at 44.5 million acres. That includes 31.9 million acres of hard red winter wheat, the type most commonly grown in Kansas.

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