Farm Futures Survey Shows Farmers Ready to Switch Corn Ground Back to Soybeans - If the Price is Right

30/08/07 Spurred by record new crop prices and demand, U.S. farmers planted a mammoth corn crop in 2007 by undertaking a groundbreaking shift in acreage. But a new Farm Futures survey suggests this year was just the prelude to what's shaping up as an unprecedented battle to buy acres in 2008.

A year-long soybean price rally gives farmers reasons to shift back to their traditional crop rotations. This reversal could tighten corn supplies to dangerously low levels according to Farm Futures market experts.

Producers responding to an August e-mail survey report they are ready to cut corn acres by 9% next year and put the ground back to soybeans. The survey puts 2008 corn intentions at 84.9 million acres, down from 92.9 million this year. Soybean seedings would surge to 72.6 million, up from 64.1 in 2007. Wheat acres could fall slightly to 59.8 million, down from 60.5 million in 2007.

"This year's massive shift in acreage showed farmers have learned how to respond to the signals of the market," says Farm Futures Senior Editor Bryce Knorr, who directed the survey. "Now with stocks of corn, soybeans and wheat all projected to be tight in 2008, prices will decide what crops they plant."

Farm Futures research also suggests the recent rally in wheat prices since the survey was conducted could increase winter wheat seedings by 1 million acres or more if gains hold into the fall.

Based on the August survey, Farm Futures forecasting model shows Sept. 1, 2009 corn supplies could fall to just 685 million bushels, even with significant rationing in exports and feed usage. Soybean stocks would barely grow at all despite the increase in seedings, while wheat supplies also would remain close to this year's tight projected levels.

Farm Futures Market Analyst Arlan Suderman will discuss the ramifications of producer decisions reflected in the survey at the Farm Progress Show this week in Decatur, Ill., August 28, 29 and 30. His twice-daily seminars will be held in the show's Seminar Center and start at the following times: Tues. at 9 a.m. and 2:30 p.m. and Wed. and Thurs. at 9 a.m. and 1:30 p.m. Suderman has been forecasting a battle to buy acres for more than a year.

"High input costs and attractive soybean prices have lured farmers away from corn's charm," says Suderman. "Unfortunately, corn can't afford to give up 8 million acres without significantly reducing demand, setting up a classic bidding war for acres over the next six months."

The magazine's estimates are based on an exclusive e-mail survey of more than 600 producers conducted July 26 to August 4. More details will be forthcoming in the October issue of Farm Futures, which will feature the cover story "Turf Wars: The Battle to Buy Acres in 2008."