February 20, 2011 / 4:20 PM / 8 years ago

Grains Week Ahead-Big acreage numbers seen from USDA forum

 * USDA forum to be market focus
 * Increased plantings forecasts expected
 * Eye also on advancing soy harvest in Brazil
 * Coming up: Reuters Poll on seedings on Tuesday
 By K.T. Arasu
 CHICAGO, Feb 20 (Reuters) - Grain markets will turn their
attention to supply-side factors this week, with forecasts from
the U.S. government set to show increased spring seeding and
the record harvest of soybeans in Brazil gaining speed.
 The U.S. Department of Agriculture's annual Outlook Forum
on Thursday and Friday comes on the heels of the department's
preliminary projections last week of unexpectedly higher corn
and soybean seedings, which pressured prices for two days.
 There is a nascent consensus among analysts that forecasts
at the conference could be similar to the baseline projections,
which estimated 92 million acres to be planted with corn -- the
second-highest since World War Two -- and 78 million of soy.
 If such expectations are borne out, consumers struggling
with record-high global food prices will get some relief, as
will policymakers fighting inflation in countries such as China
and India -- powerhouses of demand for commodities.
 "The forum will be the stand-out event," said grains
analyst Don Roose of U.S. Commodities in West Des Moines, Iowa.
"We'll also be watching the harvest in Brazil."
 Brazil, the world's second-largest soybean grower and
exporter after the United States, has begun drawing demand away
from the United States. But more importantly, top buyer China
has canceled some of its U.S. purchases.
 Roose said he was expecting the USDA forum to forecast that
corn will be planted on 92 million to 93 million acres in the
United States and 78 million acres with soybeans.
 This year, U.S. farmers planted 88.2 million acres with
corn and 77.4 million acres with soybeans.
 Analysts said while acreage is expected to increase this
year, the focus will remain on ending stocks, especially for
corn, which is forecast at the lowest in 15 years.
 They said large productions are critical in ensuring
deleted stockpiles in the United States are rebuilt, adding
that corn stocks should ideally be above 1 billion bushels.
 "The carry-out outlook does not change very much," said
grains analyst Charlie Sernatinger of ABN Amro in Chicago. "It
looks that that issue has been kicked down the road."
 He said forecasts were for corn to be planted in 92 million
acres and soybeans in 78 million.
 Darrel Good, an agricultural economist and professor
emeritus with the University of Illinois at Urbana-Champaign,
said he would be surprised if the outlook forum forecast crop
data that was much different from the preliminary projections.
 "There is every motivation for the farmer to plant every
acre of cropland this year. This means a sharp increase in
double-cropping," he said, alluding to grain prices hovering
around 2-1/2 year highs.
 It is common practice for farmers who harvest their soft
wheat in June to double-crop the land with soybeans.
 He said the increase in grain acreage was a vital step
toward boosting U.S. and global supplies and thereby cooling
record-high food prices. Good said the other crucial factor
would be for the weather to make it a good growing season.
 Dale Durchholz, a grains analyst with AgriVisor in
Bloomington, Illinois, said it was profitable to grow corn at
current high prices both in cash and futures markets.
 "This is a lucrative profit opportunity," he said. "The
income potential the market is offering to people is just so
huge that they will plant on land that they otherwise may not
have planted," he said. "This might have a drop on yields."
 Settlement prices for CBOT grains and oilseed complex:
  LAST      NET    PCT     YTD
                                    CHG    CHG     CHG
CBOT corn       Cc1      709.75    -3.00  -0.4%   12.8%
CBOT soy        Sc1     1368.00   -36.50  -2.6%   -1.8%
CBOT meal       SMc1     362.00   -10.70  -2.9%   -2.2%
CBOT soyoil     BOc1      56.49    -1.76  -3.0%   -2.2%
CBOT wheat      Wc1      822.25   -28.50  -3.4%    3.5%
 (Reporting by K.T. Arasu;editing by Sofina Mirza-Reid and
Maureen Bavdek)

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