Price rise to boost U.S. soy plantings
LONDON, June 14 (Reuters) - U.S. farmers are likely to have boosted soybean plantings after the recent run-up in prices at the expense of corn although the extent of the rise is likely to be modest, U.S. Department of Agriculture chief economist ...
LONDON, June 14 (Reuters) - U.S. farmers are likely to have boosted soybean plantings after the recent run-up in prices at the expense of corn although the extent of the rise is likely to be modest, U.S. Department of Agriculture chief economist Robert Johansson said on Tuesday.
"It was probably more of a marginal change than a wholesale change," he told Reuters on the sidelines of the International Grains Council's annual conference.
USDA in a prospective plantings report in March put U.S. soybean area at 82.2 million acres, down less than one percent from last year, while corn plantings were forecast to rise by six percent to 93.6 million acres.
"Following that report we've seen a large change in expectations about soybean prices relative to corn prices. It started an upward trend immediately after that report and has continued since," he said.
"As prices started to change there was an opportunity for some producers in some states to switch," he said, noting plantings had continued through April and into May.
He also said that those farmers who had planned to plant corn may already have purchased their inputs such as seed and fertilisers.
"We would have expected producers to have wanted to do that (switch) but is just a matter of whether they had the resources to be able to switch over to different planting regime than they were expecting," Johansson said.
He said that the USDA's March prospective plantings report had under-reported soybean acres and over-reported corn area in 13 of the last 20 years.
USDA is due to update its forecasts for U.S. corn and soybean plantings in a closely watched report on June 30.
Johansson said the change in prices in driven partly by hot, dry weather in Brazil which was not beneficial for second crop corn and soybean production. In contrast, the weather in Argentina was too wet for the soybean crop.
A reduction in stocks in Argentina has also been supportive.
"Argentina was sitting on a lot of soybean stocks and with their devaluation have been exporting a lot higher quantities of both corn and soybeans but those stocks are winding down," he said.
Johansson said wheat prices had failed to keep pace with the recent rise in soybean and corn prices, weighed down by expected record supplies of the grain.
The decline in the relative price of wheat could increase animal feed demand for the grain.
"We would expect to see some increase in feed demand being met by wheat and that is going to weigh a little bit on corn and soybeans," he said. (Reporting by Nigel Hunt. Editing by Jane Merriman)