US farmers are poised to plant more acres to corn than the government's latest outlook forecast given the profit potential of corn over soybeans and wheat, an executive with the largest US farmer co-operative said on Friday.
"Given the trend in the economics of the corn versus soybean spread equals the much higher reward for corn acres - it seems to me that the trend for more corn acres would also be logical," Keith Swanson, crop nutrients risk manager for CHS Inc, told the Global Ags Forum, Reuters on-line grains chatroom.
The US Department of Agriculture is forecasting American farmers to seed 92 million corn acres this spring, which would be the second-largest corn plantings since World War II. But traders are awaiting USDA's March 31 plantings report, based on actual farmers' surveys, to get a better gauge of acreage.
"If the trade is currently anticipating 92 million and the trend in the spread is still more favourable for corn, I would expect to see still more corn acres than the 92 eventually go in," Swanson said. "Of course Mother Nature will play a big role." World grain prices have been on a roll since late 2010, spiking to levels not seen since 2008 - a year of record high commodity prices. Tightening supplies and strong demand have driven all grain prices higher this year.
But corn has been the market leader, outpacing both soybeans and wheat given USDA's projection for the US corn stockpile to fall to its lowest level in 15 years. Grain prices remain historically high, even though they have cooled this month on Middle East turmoil and as the earthquake in Japan, the top buyer of US corn, caused ports to close. This week, the price ratio of Chicago Board of Trade November soybeans to December corn - contracts that reflect the 2011 harvest - fell to its lowest level in four months, at 2.16 to 1. Anything below 2.2 to 1 tends to favor corn plantings.
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