The Report Report: More Beans Less Corn

Corn Called 20-30 higher, Beans Down 40-50, Wheat Down 5 - 10
WASHINGTON (DTN) -- U.S. farmers plan to plant 11 million more acres to soybeans and cut corn area by 7.6 million acres, USDA reported early Monday.
If realized, that would mean 74.8 million acres of soybeans and 86.0 million acres of corn this year.
All wheat acreage is projected to increase to 63.8 million acres, up from 60.4 million acres in 2007. Cotton acreage is projected to decline to 9.4 million acres, down 2.8 million acres from a year ago.
The soybean acreage is more than a half million acres more than the highest pre-report estimates, while the corn total is nearly a million and a half acres below the average guess.
For the five crops -- soybeans, corn, wheat, sorghum and cotton -- acreage is projected to total 241 million acres, up nearly 2 percent from last year and almost 3 percent above the 5-year average. If realized, the cotton acreage will have dropped to the lowest level since 1983.
USDA also reported stocks of grain as of March 1. Corn stocks totaled 6.860 billion bushels, up 13 percent from March 1, 2007, and below the low end of trade estimates. Soybean stocks totaled 1.428 billion bushels, down 20 percent from a year ago but above the high end of estimates. All wheat stocks fell to 710,000 bushels, down 17 percent from a year ago but above most trade guesses.
For the corn, USDA said expected acreage is down in most states, with the biggest reduction expected in Iowa, where corn is expected to be seeded on 13.2 million acres, down a million acres from last year. Indiana and Minnesota are each expected to cut corn acreage by 800,000 acres.
Soybeans are expected to gain acres in every state but West Virginia. The largest increases are expected in Iowa and Nebraska, up 1.25 million acres and 1.20 million acres respectively. Increases of 800,000 acres are expected in Indiana, Minnesota and South Dakota. Record high soybean plantings are expected in Kansas, New York and Pennsylvania.
For the wheat, USDA raised its expectations for the winter wheat crop size slightly, with increases mainly in soft red winter areas. Spring wheat acres are expected to increase 8 percent over a year ago, with biggest increases expected in the Dakotas and Minnesota.
Assuming trendline yields of 155 bushels per acre for corn, harvested acres at 92 percent for corn, and beginning stocks of 1.438 billion bushels and total demand of just over 13 billion bushels, according to studies prepared earlier by DTN contributing analyst Joel Karlin, today's numbers imply a 2008/09 ending corn stocks of 800 million bushels.
For soybeans, assuming trendline yields of 42 bushels per acre, harvested area at 98.5 percent, beginning stocks at 140 million bushels and demand at 2.950 billion bushels, Karlin's tables would indicate 2008/09 ending stocks of 224 million bushels.
The operative word, this early in the season, of course, is "assumptions." It surely won't take long for analysts and traders to raise questions about the accuracy of the government's projections.
One of the first considerations could well be the weather, and how conditions have changed even since the survey was conducted in the first two weeks of March.
"Wet and cool weather during March may wash out any notable impact from Monday's acreage intentions report, due to building concerns about field work delays forcing acreage changes already this season," said DTN Meteorologist Bryce Anderson ahead of the report. "The likelihood that field work will not even get started in the eastern Midwest and Delta until mid-April at the earliest points to corn planting being very late this season. Southern producers, especially, are likely to seriously consider switching out of corn into soybeans or cotton, in order to avoid planting corn which would be pollinating during the heart of the summer--when temperature stress would be at its strongest level."