A USDA report released Friday on the number of acres planted by U.S. farmers sent crop prices up sharply.
The U.S. Department of Agriculture projects that American farmers will plant the most corn acres since 1937, 95.9 million acres. The amount of winter wheat acres is also up, while soybean acres are expected to decline slightly.
The price of corn and wheat rose nearly 7 percent, while soybeans were up 3.5 percent.
The price of cattle, for which the cost of grain is a key input, suffered a drop of 1 to 2 percent.
Never miss a local story.
In Kansas, farmers moved in the opposite direction. Following a difficult, drought-afflicted 2011, Kansas farmers are expected to trim corn acres by 200,000 to 4.7 million. Soybeans acres are also down 100,000 acres to 3.9 million. Instead, farmers have planted 9.5 million acres of wheat, up 700,000 acres.
Kansas farmers may have switched some of their corn acreage to wheat to recoup some of their lost income with a crop that is harvested earlier, said Tom Leffler, owner of Leffler Commodities in Augusta.
The outlook for prices seems strong in the near future, but wheat and corn prices could fall as the year wears on.
Corn: The USDA reports that the already tight stocks of corn are even tighter than earlier projected, and that drove prices up Friday, said Arlan Suderman, Wichita-based market analyst for Farm Futures. On the other hand, the USDA is forecasting what could turn into an enormous corn crop in the fall; still the price for September corn also rose. Suderman thinks that is because investors think the harvest is several months away, and a lot still has to go right. If the corn crop still looks strong in July, with good growing weather, prices likely will start to fall.
Soybeans: The outlook for soybeans is the brightest and least complicated, said Leffler. There’s a shortage of existing stocks, a drought in the soybean growing areas of South America, and likely continued strong demand from China. “They should maintain their prices or go higher,” he said.
Wheat: Wheat is the weakest of the three, with a significant worldwide surplus. But Suderman said that’s deceiving because Kansas grows high-quality wheat for human consumption, which isn’t nearly as overstocked. Even so, he said, if the crop turns out well in places such as Kansas, prices are likely to fall.
Beyond supply and demand, Suderman pointed to risks such as a military conflict in the Middle East sending speculators to the sidelines, pulling billions out of the market. Another factor will be whether the Chinese economy slows softly or sustains a harder crash.