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CME: Analysts Predict US Corn Plantings Down

CME: Analysts Predict US Corn Plantings Down

30 March 2015
CME Group

US - Analysts' predictions showed a fall in corn plantings in the US this year ahead of the USDA planting survey, write Steve Meyer and Len Steiner.

The USDA will soon publish the results of its annual survey prior to the start of the planting season.

This is a key report used by analysts and market participants to form ideas about the size of the grain crop in the fall and it is critically important for US livestock and poultry producers.

The table summarises analyst estimates based on a poll conducted by Bloomberg. On average, analysts expect US farmers to plant about 88.8 million acres with corn this spring, down 1.8 million acres from a year ago and in line with the USDA projections outlined in the February outlook meetings.

US farmers are expected to start the next marketing year with about 1.8 billion bushels of corn in storage and the reduction in acres reflects these ample stocks and the decline in profitability from prior years.

Some analysts think that the reduction in corn acres may be even larger but one needs to consider the shifts that took place in US farming following the surge in ethanol demand.

Pulling back on planted acres, given investments in equipment and land, will likely be a slow process. Acres enrolled in the Conservation Reserve Program have declined sharply and this also will impact the plantings numbers we see this spring.

For reference, corn plantings in 2012 were 97.3 million acres. Once the planting number is published this Friday, market participants will start to focus on the relative pace of plantings and what that may imply for corn yields.

As always there is plenty of speculation as to the corn yields we will see this year, always a favourite pastime coming into spring.

The USDA Outlook Forum presentation used a trend yield of 166.8 bushels per acre of corn and a total production number of 13.595 billion bushels. Some analysts point out that corn yields tend to decline below trend following a record year and it will be interesting to see if this year follows that same path.

Overall, however, if plantings approach the 89 million acre level for corn and corn yields remain near the 165-166 bushel/acre area, corn prices are likely to remain in the $4.00 to $4.50 area.

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