Soybeans have taken first blood in the annual US "battle for
acres" by winning the important February price war against corn, prompting analysts
to lift expectations for sowings of the oilseed.
Rabobank raised to a record 78.0m acres its forecast for US
soybean plantings this spring, for the 2013-14 harvest, while Macquarie pitched
its estimate even higher – at 79.7m acres.
These forecasts are above the 77.5m acres that the US Department
of Agriculture revealed in its initial outlook for domestic crops, two weeks
The extra area will come in part at the expense of corn plantings,
for which Rabobank cut its estimate by 900,000 acres to 96.5m acres, in line
with the USDA figure, and implying a fall in sowings year on year.
Macquarie pitched its corn number at 96.6m acres.
'Lose some acreage to
The figures reflected the relative strength of corn futures
compared with soybean futures last month, a period which determines the rate at
which US crop insurance pays out.
The US Department of Agriculture has set the price of
insurance payouts on corn at $5.65 a bushel, and $12.87 a bushel for soybeans,
besides $8.44 a bushel for winter wheat.
That represents a ratio of soybean prices to corn prices - a
key determinant of which of the rival crops US farmers will favour in their
spring planting programmes – at 2.28, up from 2.21 last year.
"Soybeans appear to have gained ground on corn and cotton in
the annual battle for acreage in the US," Rabobank said.
"Insured new crop prices suggest corn may lose some acreage
to soybeans and spring wheat."
Soybeans also looked likely to gain preference from their
lower fertilizer requirements, given the scale of plantings farmers look likely
to make on land released from conservation programmes, and which will require extra
fieldwork and inputs.
Soybeans, as nitrogen fixing plants, do not require this
The prospect of extra soybean sowings, and so bigger
production, prompted Rabobank to cut its estimate for prices of the oilseed in
the second half of the year, with the fourth-quarter average pegged at $12.25 a
bushel, a level not seen since February 2012.
Rabobank stuck by expectations of corn prices averaging
$5.70 a bushel in the October-to-December period, nearly $0.30 a bushel above
the level that futures are pricing in.
Macquarie analyst Chris Gadd pointed to talk of farmers
holding back on autumn fertilizer applications as evidence that they were open
to elevated levels of soybean sowings.
"This allows them to hold off the planting decision for
longer and thus the insurance price set soy:corn ratio will be more impactful,"
"This dynamic is one indicator as to why we believe the US
farmer will switch away from corn and towards soybeans in the traditional planting
The bank also bet on a relatively high level of so-called
double crop soybeans, planted late on ground cleared by the winter wheat
The battle for acres is a much-watched part of the growing
year, on which insurance rates are only one, important, input.
The ratio of futures prices closer to when the bulk of
plantings go in, from next month, is also seen a key indicator of which crop
farmers will prioritise.