High prices for soybeans should encourage U.S. farmers to sow the biggest ever area to the oilseed this spring while pulling back slightly on corn, analysts said ahead of a hotly anticipated U.S. government plantings report due on Monday.
The trade also expects the U.S. Department of Agriculture, in its first official U.S. spring plantings forecast for 2014, to raise its estimates of corn, soy and wheat acreage above the unofficial figures released in February at its annual outlook forum.
USDA surprised grain traders at the forum last month by predicting a slight drop for 2014 in overall plantings of major crops compared to 2013, a year when more than 8 million acres (3.2 million hectares) in cropland went unseeded due to poor weather, especially in northern states like Minnesota and Iowa.
Many analysts assumed those lost acres would return to production this year.
"I think the big unanswered question is, 'what happened to the prevented planting acres when USDA did their ag outlook?'" said Mike Zuzolo of Global Commodity Analytics in Atchison, Kansas.
Uncertainty surrounding the acreage numbers has helped keep the market on edge ahead of Monday's report, which will coincide with the release of USDA's quarterly U.S. grain stocks report. The plantings report is based on a survey of more than 80,000 U.S. farmers.
"Why would we not plant 4 or 5 million acres that we tried to plant last year? That makes no sense to me. The USDA forum numbers are wild guesses, and I just think they are all too low," said Terry Roggensack, analyst with the Hightower Report in Chicago.
Soy-Corn Price Ratio
The average forecast of U.S. 2014 soybean plantings among analysts surveyed by Reuters was 81.1 million acres, up 5.9 percent from 2013 and above the current all-time high of 77.5 million acres seeded in 2009.
USDA in February projected 2014 soybean seedings at 79.5 million acres.
Don Roose, president of U.S. Commodities in West Des Moines, Iowa, thinks many of the acres that farmers were unable to plant last year will go to soybeans this year.
"On some of the marginal areas, with the input cost to corn, it's a lower risk to plant soybeans," Roose said.
For corn, analysts on average expected 2014 seedings to fall to 92.748 million acres, down 2.7 percent from 2013 and the fewest in three years as producers return some fields in the Midwest to a traditional corn-soy rotation, instead of continuous corn.
USDA at its outlook forum projected 2014 corn seedings at 92.0 million acres.
One indicator analysts watch to assess acreage prospects is the price ratio of Chicago Board of Trade new-crop November soybean futures to new-crop December corn futures.
A soy-corn price ratio of roughly 2.5-to-1 or higher tends to encourage soybean plantings. The ratio settled Thursday at 2.44-to-1 but reached nearly 2.6-to-1 in mid-December, when producers were making seeding plans.
"The underlying trend toward greater row-crop acreage, combined with the high soybean/corn price ratio, leads to our expectation of record soybean acreage," CHS Hedging Inc said in a research note.
Wheat to Rebound in Northern Plains
Corn may lose acres in the northern U.S. Plains as farmers revert to spring wheat, the region's traditional mainstay crop. Corn acres have surged in North Dakota in recent years, tripling in the last decade as growers took advantage of warming temperatures, new hybrid seeds and historically high prices.
But potential returns for corn in the region have since declined sharply, making corn less attractive.
"I think a lot of those acres up there that went to corn on an experimental basis the last couple years - those guys have decided to go back to spring wheat," Roggensack said.
One wild card for spring wheat prices will be rail backlogs in Canada that have stalled the movement of last year's record Canadian spring wheat harvest to ports. That grain could hit the market in a shortened window this spring, depressing cash markets, said Shawn McCambridge, grains analyst with Jefferies Bache in Chicago.
"The logistical issues in Canada don't change the supply at all. You have a huge crop produced in Canada," McCambridge said. Nonetheless, McCambridge still expects an increase in U.S. spring wheat seedings.
The average analyst forecast for seedings of spring wheat other than durum was 12.3 million acres, up 5.8 percent from 2013. The average forecast for durum wheat was 1.8 million acres, up from 1.5 million in 2013.
Most U.S. wheat is winter wheat, planted in the fall and harvested in early summer. The average analyst estimate of winter wheat seedings for 2014 harvest was 42.157 million acres, compared with USDA's Jan. 31 estimate of 41.892 million.
The average analyst estimate of 2014 all-wheat plantings was 56.3 million acres, compared with 56.2 million seeded in 2013.