Agricultural News
Local Analyst Believes Current Commodity Prices Favor Soybeans over Corn Planting in Upcoming USDA Report
Mon, 26 Mar 2012 03:39:32 CDT
This coming Friday, the US Department of Agriculture will be releasing a pair of reports that the grain trade in the US and around the globe will be watching closely. At 7:30 AM central time, the USDA will release both a Grain Stocks report as well as the spring planted crops "Prospective Plantings" report. Justin Lewis with KIS Futures has prepared a pre report analysis of what the numbers may look like on Friday morning- and has provided us with a copy of his expectations. Click on the PDF link at the bottom of this story to see his three page analysis- complete with several graphics to help illustrate what he thinks may be coming Friday morning.
Specifically on the Prospective Plantings- here's the pre report rundown from Justin Lewis:
"The most important number in this report is the prospective plantings. The general estimates are that 94-95 million acres of corn will be planted, 75 million acres of soybeans, 58 million acres of wheat, and 12.5 million acres of cotton.
"My personal estimate is slightly different. Traditionally, the ratio of corn to soybeans has been 2.3. What does this mean? The current price of new crop soybeans divided by the current price of new crop corn is 2.4. Soybean prices are 2.4 times the price of corn. If you look at the historic ratio on a continous chart, current ratios favor planting soybeans instead of corn. Therefore I believe the actual numbers will be corn planting intentions will be closer to 94 million acres and soybeans closer to 76.5 million acres.
"Wheat planted acreage will be slightly lower than past years due to higher paying alternatives. If you are a farmer in southern Oklahoma or Texas, your delimna is not corn or soybeans, but cotton or some alternative at this time. Those winter wheat acres are already planted and look great with recent rainfall.
"There are "die-hard" cotton growers that were not in a pool that made 10 years worth of profits in the past few years. The majority were in a marketing pool and received closer to 85 cents per pound, but they are still believers and possibly opted out of the marketing pool. With cotton prices at current levels, there is still incentive to plant. The drought in the southwest actually favors cotton over corn, soybeans, & other alternative crops due to dry moisture profiles. My estimates are cotton acreage to be 13 million acres and wheat at 57.5. "
04008_USDAPreview32512.pdf
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