Farmers plan to increase plantings of corn and soybeans this spring, responding to outstanding profit potential for both crops, according to the latest Farm Futures survey. But high production costs for corn and disappointing 2010 yields in some areas suggest growers remain reluctant to devote as much ground to the crop as might be expected.
The magazine now estimates farmers hope to plant 91.4 million acres of corn this spring, 3.6% more than a year ago and the second-highest total ever, if achieved. The latest estimate is up from the magazine's December tally of just under 90 million acres. But it lags the forecast of 92 million acres made by USDA in February at its annual outlook conference.
USDA releases its much-anticipated Planting Intentions report on March 31.
Farm Futures puts 2011 soybean intentions at 78.5 million acres, up 1.4% from 2010, and an all-time record if achieved. USDA forecast 2011 plantings at 78 million acres at its February conference.
While corn and soybean plantings should rise, the Farm Futures survey found growers on the northern Plains ready to plant less spring wheat than a year ago – just 13 million acres, down 5%. Though profits from spring wheat look good, flooding problems and high returns from soybeans may persuade some farmers to switch.
"The prices used to calculate the Revenue Protection crop insurance guarantee offer farmers strong profits from all three crops," says Farm Futures Senior Editor Bryce Knorr, who conducted the survey. "Projected margins from corn, soybeans and spring wheat are at or near all-time highs."
But farmers' desires to expand soybean plantings may be driven more by risk management than profits, says Knorr. "While soybeans on paper may be a little less profitable, producers are also worried about risk. Many in the eastern Corn Belt suffered disappointing corn yields in 2010 and are ready to rotate back to more beans after several years of pushing corn. Beans also look like the crop of choice for many farmers on the northern Plains, where low protein and disease can be a problem in wheat."
The bump in soybean plantings would come despite reductions in the South, where growers likely will boost cotton acres after this year's rally to record prices. The survey found both corn and soybean seedings dropping across the Cotton Belt.
"Our last survey in December reported no change in soybean acreage, but profits improved dramatically since then," says Knorr.
Farm Futures estimates total wheat seedings at 58.4 million acres. While spring wheat and durum were down, the latest numbers again show winter wheat acreage is greater than the 41 million acres USDA reported in January in its official survey of seedings.
Farm Futures Market Analyst Arlan Suderman found several explanations for shifts seen in the survey. Winter wheat acres likely rose in part because farmers are planting the crop farther north, while soybeans may benefit from increased double cropping.
"This is a very unique year in that prices have provided an incentive for all the crops to increase acres," says Suderman. "Producers are maximizing use of their land resources while maintaining agronomic crop rotations.
"Weather will clearly influence the final acreage numbers this spring, with significant implications for prices. We could see producers abandon poorer winter wheat fields in favor of soybeans or a feed grain later this spring. Planting delays due to cool, wet soils in some areas could favor more soybeans, while warmer and drier conditions in others would favor more corn.
"Rarely do we enter a growing season with global demand so strong, stocks so tight and our ability to expand acreage domestically so limited. These conditions mean weather must cooperate from planting through harvest. That's especially true this year, as money managers unfamiliar with crop production try to anticipate the impacts of changing weather forecasts, creating potential for wide price swings."
Farm Futures surveyed more than 1,400 farmers nationwide by email March 7-21, 2011.