New crop corn futures soared, after the US said that its farmers would cut corn sowings by far more than expected, amid a switch to soybeans, with spring wheat losing out on area too.
Chicago corn futures for December, the benchmark lot for 2022 crop, soared by 4.2% to $6.83 ¾ a bushel, a contract closing high, after the US Department of Agriculture said the domestic growers would sow 89.5m acres of the grain for this year’s harvest.
That would represent a far bigger area decline than investors had expected from the 93.4m acres sown last year.
Indeed, it would be the smallest corn acreage in four years, well below the 92.0m-acre number that the market had anticipated, according to a Reuters poll.
By contrast, for soybeans, US plantings this year were pegged up 3.0m acres year on year at 91.0m acres.
That would represent a record high, and well above the 88.7m-acre figure that investors had pencilled in.
Soybean futures for November tumbled by 3.4% to $14.20 ½ a bushel, a one-month closing low.
The current soybean area record, of 90.2m acres, was set in 2017.
The extent of the switch from corn to soybeans was viewed as spurred by elevated fertilizer prices prompting farmers to favour crops which are cheaper to grow.
The shift “could reflect the shortage of supply of fertilizer and also fertilizer prices trading at a record”, said Terry Reilly at Futures International.
While corn is a particularly nutrient-hungry crop, soybeans fix nitrogen from the atmosphere, reducing their fertilizer needs.
“It boils down to the fertilizer costs,” said Don Roose at US Commodities.
‘Acres can come back’
However, he highlighted too the potential for a swing back yet to corn given that sowings are still only in their early stages, with time yet for price shifts to tempt growers back to the grain.
“As the market jumps today, these acres can come back pretty fast,” he said.
The new crop soybean: corn price ratio, viewed as an indicator of the relative financial appeal of the crops to growers, fell by 0.16 points on Thursday to 2.08, the lowest on readily available data going back to August.
Figures below 2.25 are seen by many brokers as showing markets attempting to incentivise extra corn area.
The plantings report also showed farmers intending to sow significantly fewer acres with non-durum spring wheat than the market had pencilled in.
Indeed, rather than rising by nearly 400,000 acres year on year to 11.8m acres, as investors had forecast, the USDA showed other spring wheat area falling to 11.2m acres, a five-year low.
Minneapolis spring wheat futures for July, the best-traded contract, closed up 1.8% at 10.76 ¾ a bushel.
Meanwhile, in New York, December cotton futures eased by 1.0% to 111.28 cents a pound.
The USDA forecast US cotton sowings this year rising by more than 1.0m acres to 12.3m acres, above the 12.0m-acre figure traders had braced for.