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SUE MARTIN COLUMN: Markets waiting for planting report, better weather

Acres, acres and more acres! The corn and soybean markets are lining up for the most important report of the year. March 31, the U.S. Department of Agriculture will release the prospective plantings report.

Acres, acres and more acres! The corn and soybean markets are lining up for the most important report of the year. March 31, the U.S. Department of Agriculture will release the prospective plantings report.

It appears that the trade for the past month has bought into corn acres reduced sharply this year to spring wheat and soybeans. While the trade guess is at 87.387 million acres (the range of guesses is at 85.7 million to 89.750 million acres) some analysts have even forecast acres for corn down by as much as 10.6 million to 9.6 million acres. So the fight would appear to be more between spring wheat and soybean acres. The need to maximize acres this year to meet growing world demand will keep the corn market sensitive to any threat with weather.

The winter has been abnormally cold and is holding on and doesn't seem to want to give in to spring. The benefit to this is that insect larvae should have been killed this year, so insect infestations shouldn't be as much of a problem. Wet weather this spring will only stoke anticipation of more soybean acres. But it is still fairly early.

Good planting weather would allow for corn to gain 1 million to 2 million more acres. Pasture and forage land on the fringe areas may go to row crops this year. The last time we saw this was in 1999, when 3.2 million acres switched. Most of these acres lie in the west and do not produce well so, corn will not garner those acres. I suspect soybeans do and spring wheat get the acres in the North Dakota, South Dakota and Minnesota. Federal crop and insurance revenues make these decisions easier this year. Illinois will tend to plant more corn than switching to soybeans as corn has gained 2.6 bushels per acre on trend for the past 10 years. Soybeans, however, have only gained 1.2 bushels per acre on trend. Last year, the national yield was 151.1 bushels per acre, down from the record yield of 160.4 bushels per acre in 2004 to '05. Thus far, trend line yield is forecast to be at 155 bushels per acre for 2008 to '09. The more acres we have of corn, the higher the national bushels per acre there will be as the good acres tend to yield better.

Many climatologists are forecasting an end to La Nina, but my sources indicate that while fading, La Nina should be with us through April and May and possibly early June. If so, the La Nina still could affect the weather adversely in the later part of July and August. So, forecasts by some of below trend line yield potential for corn this growing season are still foreseeable.

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I look for spring wheat acres to grow by 1.6 million to 1.7 million acres, while, durum maybe gains 180, 000 acres. Winter wheat seedings are up 5 million acres, and soybeans will be double cropped on the back side of 2.5 million acres.

With harvest now under way, world end users probably will opt to go hand-to-mouth in their purchases in months ahead if world production remains on the strong side. But to play devil's advocate, rice stocks are the tightest since 1974 to '75. Wheat stocks are at 60-year lows. Wheat and rice are interchangeable. So with tight rice stocks, wheat values over the longer pull may not get too low. Perhaps, 7.5 million to 8.5 million acres? Third quarter usage is estimated to be close to the same amount of a year ago.

March 1 stocks are forecast to be down around 200 million bushels, so a major increase in stocks is important given the steep decline of the dollar and global demand continues to climb. It's worth noting, that seed is extremely expensive (running about $50 per acre) in Wisconsin where production in 2007 was the highest since 1887. With wheat stocks so tight, one year of building stocks may not cure all ills.

We'll see how many acres drop for corn.

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