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USDA Report Sends Shock Waves Through the Grain Markets

posted on July 1, 2011

USDA Report Sends Shock Waves Through the Grain Markets

According to USDA, America's farmers planted an astonishing 92.3 million acres in corn. That's the second most corn plantings since World War II and is only 1 percent less than the all-time record set in 2007.

Prior to the report, many analysts were concerned wet weather would cut the number of corn acres. But record-high prices encouraged farmers to plant even more corn while committing less acreage to other crops like soybeans and wheat.

According to the report, states with major increases in corn acreage include Nebraska, where an additional 850,000 acres were planted. Iowa's farmers put in 800,000 more acres; South Dakota acreage rose 650,000 acres; and growers in Minnesota planted 400,000 more acres in corn than last year.

The report sent shock waves through the grain markets. Corn futures prices plummeted after forecasters announced larger-than-expected acreage supplies and raised their outlook for the fall harvest.

In early June, corn prices rallied to a record high as traders predicted low supplies combined with strong demand could lead to some shortages by the end of the summer.

Meanwhile, acreage estimates for virtually all other major crops are down from last year, with two exceptions: Cotton, which spurred by record high prices earlier this year increased by 25 percent; and total wheat acreage is estimated at 56.4 million acres. That's up 5 percent from 2010, yet the figure is actually down more than a million acres from previous USDA estimates.

Soybeans also lost ground in the acreage battle but not that much.... USDA pegs total soybean acreage at 75.2 million acres, down 3 percent from last year.

But rice producers appear to have shifted to other crops in a big way. According to USDA, total rice plantings are forecast at 2.7 million acres... down more than 25 percent from last year.


Tags: agriculture commodity prices corn crops markets news USDA weather