- Corn Planted Acreage Up 4% from 2011
- Soybean Acreage Down 1%
- All Wheat Acreage Up 3%
USDA's issued its Prospective Plantings report last Thursday and it got the attention of most industry observers as it projected the most acreage planted to corn in 75 years. At the same time, it forecast that soybean and wheat acres would slip below 2011 plantings.
The ag agency also issued its Grain Stocks report that indicated a decline in corn and wheat and increased stocks of soybeans.
- Corn Stocks Down 8% from March 2011
- Soybean Stocks Up 10%
- All Wheat Stocks Down 16%
According to USDA, growers are responding to the tight supplies and will plant 95.9 million acres with corn, the largest planting since 1937. A result of this “battle for acres” is a decline in total soybean acres, which is expected to drop 1% to 73.9 million acres. All wheat planted area is estimated at 55.9 million acres, up 3% vs. 2011.
Overall, total major crop acreage is expected to be 225.7 million acres, vs. industry consensus of 227.8 million acres and 221.3 million acres in 2011-12, which represents a year-over-year increase of 2%.
While analysts generally see the USDA report as a positive for farm machinery sales, they also see a mixed bag when it comes to overall crop receipts for the year.
“The growth in acres is bullish for machinery companies, however, the USDA's projections will likely have a negative impact on corn prices offset by a positive impact on soybean prices, in our view,” says Ann Duignan, machinery analyst for JP Morgan.
“All else equal, our forecast for major crop receipts for 2012-13 increases slightly as a result.”
Henry Kirn, analyst for UBS Global Research, adds, “While acreage is seemingly bearish for corn, the estimate could be too high.”
He cites fellow UBS analyst Peter Hickson’s earlier report that contends USDA’s corn yield projections are too optimistic.
In that report, Hickson notes, “We believe initial USDA corn yield estimates will be too high.”
As a result, Kirn says, “We could see a markdown of corn production estimates as the growing season progresses — potentially positive for stocks of ag equipment manufacturers. Additionally, we see the lower-than-expected grain inventories as a positive.”