Farmers to plant record high soybean crop in 2010, while boosting corn supplies

USDA: Soybean crop will hit record high in 2010

KANSAS CITY, Mo. — Farmers hope to plant a record crop of soybeans and another huge corn crop this spring, helping fill grain bins around the country and easing fears of global food shortages, according to a report released Wednesday.

The report by the Department of Agriculture of estimated crop acreage caused steep drops in soybean and corn prices as analysts reacted to forecasts that reserves of the crops would increase this fall.

That means supplies won’t be so low in the global food market, where unprecedented demand from the biofuels and meat industries had drained reserves to dangerous levels in recent years.

“It means we’re not going to be in as tight of a situation as we thought we would be,” said Pat Westoff, co-director of the Food and Agricultural Policy Research Institute at the University of Missouri.

Although prices for corn and soybeans are far below record levels seen in 2008, farmers like Tim Burrack said the crops still should be profitable due to lower costs for fertilizer and fuel.

Burrack, who farms in northeastern Iowa, has begun preparing his 2,000 acres for the spring planting. He plans to boost his corn acreage by at least 160 acres this year, and he knew other farmers would do the same even though prices probably would fall this summer because of increased production.

“It looks to me like we’re in a new parameter now for corn and soybean prices,” he said. “They’ll be lower than they have been.”

Kevin Roth, a farmer in southwest Iowa, said he and his neighbors also plan to grow more corn. He’ll devote about two-thirds of his property to corn and the rest to soybeans.

He could only shrug at news that decisions by farmers to grow more corn would cause prices to drop.

“It looks a lot better when the markets are going up,” Roth said. “Today, they’re not heading in the right direction.”

Crop futures fell Wednesday on the Chicago Board of trade, with corn dropping 9.5 cents to $3.45 a bushel. Soybeans fell 33 cents to $9.41 a bushel and wheat fell 21 cents to $4.50 a bushel.

Prices dropped because the expected reserve stocks of grain were so surprisingly high, according to Westoff and other analysts. The new estimates show the U.S. will carry over about 15 percent of the corn crop grown this year, Westoff said, compared to 12 percent in the 2006 and 2007 crop year. The soybean reserve will jump to 6 percent of the crop used, compared to just 4.5 percent last year.

Reserves will be bolstered by this year’s huge crop. Farmers plan to plant a record 78.1 million acres of soybeans in 2010, and 88.8 million acres of corn, a near record. The wheat crop is estimated at 53.8 million acres, down 9 percent from last year. The cotton crop is forecast to rise 15 percent to 10.5 million acres.

Soybean and corn reserves had dropped to historically low levels during the past two years due to rising demand from overseas markets and the U.S. ethanol industry. But with the global recession draining demand from the grain market, farmers are again poised to grow a crop big enough to cause surpluses to grow.

Corn stocks are expected to total 7.69 billion bushels in March, up 11 percent from last year. Soybeans stocks will fall 2 percent to 1.27 billion bushels, but that figure is about 60 million bushels higher than the market had expected.

If the extra buffer helps push crop prices down, it could help consumers by restraining food prices, said Bill Lapp, a commodity analyst and president of Advanced Economic Solutions in Omaha, Neb. But the gain won’t be immediate. Raw ingredient prices make up just a fraction of the cost of food at the grocery store, so lower crop prices don’t translate into quick savings for shoppers.

The savings will be felt more quickly by meat producers that buy huge quantities of corn and soybeans for animal feed, Lapp said. That could eventually hold down the price of beef and pork.