Grainnet

In a June 29 Crop Acreage Report described by analysts as "shocking," the U.S. Department of Agriculture forecast a huge increase in corn acreage from its March report and a big drop in soybean acreage.

With a forecast of nearly 93 million acres, up from around 90.5 million in the March report, analysts speaking at a teleconference from the Chicago Board of Trade (CBOT) hinted that the 2007 corn crop could reach as high as 13 billion bushels.

"With good pollination and favorable weather, we should be talking about a 12.5-billion-bushel crop and possibly even 13 billion bushels," said Brian Basting, commodity research analyst for Advance Trading Inc., Bloomington, IL.

In its quarterly Grain Stocks Report, also released June 29, USDA reported huge decreases in corn and wheat stocks in all positions as of June 1 compared to a year ago but a big increase in soybean stocks.

Following are the USDA numbers:

CORN CROP ACREAGE

Corn planted area for all purposes is estimated at 92.9 million acres in 2007, up 19% from 2006 and 14% higher than 2005.

Farmers increased corn plantings 3% from their March intentions, resulting in the highest planted area since 1944, when 95.9 million acres were planted for all purposes.

Wet conditions during March and April delayed field preparations and planting activities in teh Corn Belt and Great Plains.

Conditions dried out considerably in the eastern Corn Belt and Ohio Valley during May allowing producers to make good planting progress, but the lack of precipitation reduced topsoil moisture and increased stress on the crop.

Meanwhile, excessive rainfall in parts of the western Corn Belt, central and southern Great Plains, and middle Mississippi Valley during much of May continued to hamper fieldwork.

Despite the weather-related delays, growers made rapid progress, and planting was completed ahead of the average pace.

Farmers reported that 99% of the intended corn acreage had been planted at the time of the survey interview, which is slightly above the average for the past 10 years.

CORN STOCKS

Corn stocks in all positions on June 1, 2007 totaled 3.53 billion bushels, down 19% from June 1, 2006.

Of the total stocks, 1.83 billion bushels are stored on farms, down 22% from a year earlier.

Off-farm stocks, at 1.71 billin bushels, are down 15% from a year ago.

The March-May 2007 indicated disappearance is 2.53 billion bushels, compared with 2.63 billion bushels during the same period last year.

SOYBEAN CROP ACREAGE

The 2007 soybean planted area is estimated at 64.1 million acres, down 15% from last year's record high.

Area for harvest, at 63.3 mllion acres, also is down 15% from 2006.

This is the lowest planted and harvested area for soybeans since 1995.

With the exception of New York, Pennsylvania, and the Southeast states, planted acreage decreased in all states across the country.

Growers in Illinois and Iowa showed the largest decrease in soybean acreage from last year, down 1.75 million acres and 1.35 million acres, respectively.

Large declines in soybean area occurred across the Corn Belt and Great Plains, with planted acreage also down more than 1 million acres from last year in Indiana, Minnesota, and Nebraska.

Many farmers across the country shifted to planting more corn this year, at the expense of soybeans.

However, increases in soybean area occurred across the Southeast, where some farmers shifted from cotton to corn and soybeans.

New York and Pennsylvania both set new record high planted areas, at 215,000 and 440,000 acres, respectively.

Nationally, farmers reported that 88% of the intended soybean acreage had been planted at the time of the survey interview, compared with the average of 81% for the past five years.

SOYBEAN STOCKS

Soybeans stored in all positions on June 1, 2007 totaled 1.09 billion bushels, up 10% from June 1, 2006 and the largest June 1 stocks on record.

On-farm stocks totaled 500 million bushels, up 1% from a year ago.

Off-farm stocks, at 591 million busehls, are up 19% from the previous year.

Indicated disappearance for the March-May 2007 quarter totaled 696 million bushels, up 3% from the same period a year earlier.

WHEAT CROP ACREAGE

All wheat planted area is estimated at 60.5 million acres, up 6% from 2006.

The 2007 winter wheat planted area, at 45.1 million acres, is 11% above last year and up 1% from the previous estimated.

Of this total, about 32.4 million acres are hard red winter (HRW), 8.8 million acres are soft red winter (SRW), and 3.91 million acres are white winter (WW).

Area planted to toher spring wheat for 2007 is estimated at 13.1 million acres, down 12% from 2006.

Of this total, about 12.6 million acres are hard red spring (HRS) wheat.

The durum planted area for 2007 is 2.23 million acres, up 19% from the previous year.

WHEAT STOCKS

All wheat stocks stored in all positions on June 1, 2007 totaled 456 million bushels, down 20% from a year ago.

On-farm stocks are estimated at 73.2 mllion bushels, down 34% from last year.

Off-farm stocks, at 383 millin bushels, are down 17% from a year ago.

The March-May 2007 indicated disappearance is 401 million bushels, up slightly from the same period a year earlier.

Durum wheat stocks in all positions on June 1, 2007 totaled 21.6 million bushels, down 47% from a year ago.

On-farm stocks, at 8.95 million bushels, are down 61% from June 1, 2006.

Off-farm stocks totaled 12.6 million bushels, down 27% from a year ago.

The March-May 2007 indicated disappearance of 17.3 million bushels is down 31% from the same period a year earlier.

ANALYSIS

During the CBOT teleconference, Greg Wagner, director of marketing risk management for Horizon Ag Strategies, Chicago, IL, commented that "there had been much wringing of hands and gnashing of teeth" over supply issues as weather delays in April and extreme dryness in May seemed to spell trouble for the corn crop.

Since then, however, timely rains and cooler temperatures appear to be benefitting the crop, in addition to the radically increased acreage.

China is the "wild card" on corn ending stocks, Wagner added.

Dry weather in China's corn-producing provinces may hurt the Chinese crop to the point where that country will once again become a net importer.

Wagner also noted that "we're not out of the woods" on U.S. production, with more rain needed for pollination season in July and a good harvest season.

Advance Trading's Basting commented that today's report initially will prove bearish for corn prices, but worldwide demand will place a floor under prices.

He added that today's report will provide a "reprieve" for livestock and ethanol producers who had faced sharply higher corn prices.

On the other hand, soybean prices are expected to soar to new contract highs on today's report.

Basting commented that sharply higher prices are necessary to entice increased acreage planting this fall in Brazil and Argentina, which will be necessary to meet world demand.

Any weather-related setbacks to the U.S. soybean crop also will set off prices.

The wheat markets are expected to remain strong, as nearly two weeks of non-stop rain has delayed harvest in the southern Plains, and wheat crops remain stressed worldwide.

"We're losing wheat acres every day in Oklahoma," said Basting.

"Producers there could get $5 a bushel for their wheat, but it's turning into junk."

See Related Websites/Articles:

• June 29 USDA Crop Acreage Report
• June 29 USDA Grain Stocks Report

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