March 18, 2002
MARKET WAITS FOR PROSPECTIVE PLANTINGS
soybean prices have moved to the highest level since the first week
of September 2001. The average cash price in central Illinois on March
15 was $4.585, $.60 above the harvest time low. The average cash price
of corn in central Illinois was $1.92 on March 15, $.125 above the harvest
low and $.10 below the December high. The prices of both crops have
been in a very narrow range so for this marketing year. The cash price
of soybeans is $.30 above the price on the same date last year, while
the cash price of corn is $.075 higher.
One of the
factors that has kept corn prices in check in recent weeks is the expectation
that U.S. corn acreage will increase significantly in 2002. Planted
acreage in 2001 totaled 75.752 million acres, 3.8 million less than
planted in 2000 and 4.4 million below the recent high established in
1998. The decline in acreage last year was fairly widespread, except
for Indiana where plantings increased by 100,000. The largest absolute
declines came in Iowa (600,000), Texas (500,000), South Dakota (500,000),
Minnesota (400,000), and Nebraska (400,000). Declines were generally
smaller in other eastern corn belt states, totaling 450,000 acres in
Illinois, Ohio, and Wisconsin. At least part of the decline in corn
acreage in northern growing areas resulted from prevented plantings
due to excessive precipitation.
forecasts reflect expectations of an increase of 2 to 3 million acres
in corn plantings in 2002, with most expectations closer to 3 million
than to 2 million. The increase is expected to come as a result of an
increase in total planted acreage and as a result of corn replacing
other crops - cotton, rice, and perhaps soybeans.
acreage in the U.S. increased every year from 1993 through 2000, but
declined by 260,000 in 2001. The increase in acreage since 1993 has
come largely in the western corn belt. Acreage in 7 western states grew
from 25.3 million in 1993 to 37.7 million in 2001. Those states accounted
for 42 percent of the soybean acreage in 1993 and 51 percent in 2001.
Acreage in the eastern corn belt grew from 20.4 to 24.65 million over
the same time period, with the share of the U.S. total remaining very
stable near 33 percent. Acreage in the rest of the country declined
from 14.4 million to 11.8 million, with the largest declines occurring
in the Delta states. The large increase in soybean acreage in recent
years has come primarily at the expense of wheat acreage.
for intended acreage of soybeans in 2002 is mixed. Private forecasts
reflect expectations of a 500,000 acre increase to a 500,000 acre reduction
in soybean plantings. Expected stability in acreage in 2002 reflects
stability in wheat acreage and declining competitiveness of soybeans
in high corn-yielding areas.
addition to acreage of individual crops, the other story to be revealed
in the USDA's Prospective Plantings report will be the total
crop land area expected to be planted in 2002. Cropland area declined
by about 7 million acres in 2001. Total area should rebound in 2002
if the planting season is generally favorable, but by how much?
magnitude of planting intentions will be important for both corn and
soybean prices, although the March report may not be the final word
on planted acreage. Since 1996, actual planted acreage of soybeans has
varied from March intentions by as much as 2.55 million acres (2001)
to as little as 25,000 acres (1998). Planted acreage exceeded March
intentions each year from 1996 through 1999 (as well as in the previous
five years), but fell short of intentions in 2000 and 2001. Planted
acreage of corn since 1996 has varied from March intentions by as much
as 1.9 million (1997) and as little as 616,000 acres (1998). Planted
acreage was less than March intentions in 5 of the past 6 years. Once
the market absorbs the Prospective Plantings report, attention
will begin to focus on planting conditions and early season weather
prospects. As usual, there will likely be a wide range of forecasts
about the nature of the 2002 growing season.
very narrow trading range in cash corn and soybean prices during the
first 6.5 months of the 2001-02 marketing year suggests that new highs
or new lows in the cash market will occur over the next 5.5 months.
For soybeans, the current expectation is that new highs will be established,
since the low so far this year is consistent with the marketing year
lows of the past 4 years. A high near $5.00 in central Illinois would
be consistent with the trading range experienced the past two crop years.
Prices at that level will require continued large soybean purchases
by China and the Prospective Plantings report to show no significant
increase in acreage.
corn, expectations are more mixed. The lowest cash price in central
Illinois to date is well above the lows of the previous 4 years, but
the high so far is also below the level of the previous 3 years. Prospective
crop size, beginning with the planting intentions report, will determine
the direction of prices. History, points to at least a window of opportunity
for new highs in the cash market in the May through July time period.
University of Illinois