US farmers will sow even more cotton and soybeans than
investors had expected, encouraged by weak grain prices which are set to send
wheat area to a record low, and drive 3.6m acres out of production altogether.
The US Department of Agriculture, at its annual Outlook Forum
to kick off formally 2017-18 estimates, forecast US soybean sowings this year rising
by 4.6m acres to a record 88.0m acres.
The increase in area, to a level above the 87.58m acres that
analysts had expected, reflects soybean prices which have so far this month
averaged nearly 2.6 times as much as corn, the main competitor in US farmers' spring
"The last time the ratio during February was this favourable
to soybeans was in 1997," Robert Johansson, USDA chief economist, told the conference.
Feed grains out of
Corn sowings were, losing out to soybeans, forecast falling
by 4.0m acres to 90.0m acres, a bigger drop than expected by investors, who had
expected the figure to come in at 91.05m acres.
However, grains overall were seen falling out of favour,
with sorghum area "in particular" expected to drop, and rice sowings to tumble
by 17% to 2.6m acres.
US crop area estimates 2017, change on year and (on market forecast)
Corn: 90.0m acres, -4.0m acres, (-1.05m acres)
Soybeans: 88.0m acres, +4.6m acres, (+420,000 acres)
All wheat: 46.0m acres, -4.2m acres, (-852,000 acres)
All cotton: 11.5m acres, +1.4m acres, (+416,000 acres)
Rice: 2.6m acres, -600,000 acres, (n/a)
Other feedgrains: 11.7m acres, -900,000 acres, (n/a)
Total top eight crops: 249.8m acres, -3.6m acres, (n/a)
Sources: USDA, Reuters
"We are likely to see fewer acres planted to corn, rice and
other feed grains," Mr Johansson said.
This decline was also extended to wheat, in which overall
plantings were pegged at 46.0m acres – down 4.2m acres, and the smallest area
on records going back a century.
The figure implies a drop in spring wheat sowings, as well
as winter wheat plantings, were revealed last month to have tumbled by 3.8m
acres to 32.4m acres.
'Increase in idled
Mr Johansson highlighted the dent to growers' enthusiasm
from weak agricultural commodity prices which have left US farms overall
looking at net farm income of $62.3bn this year – half the levels seen as the
"Lower commodity prices will likely lead to reduced planted
area," seen falling for the eight top field crops combined by 3.6m acres to a
multi-year low of 249.8m acres.
"Lower crop returns will push some area out of production,"
besides encouraging farmers to switch crops.
"We expect to see an increase in idled acres – acres that
had been brought into production as commodity prices rose through 2012."
Cotton in vogue
However, cotton, besides soybeans, was forecast bucking the
downward trend in sowings, with US plantings seen soaring by 1.4m acres to a
four-year high of 11.5m acres, encouraged by higher prices.
"The rebound in cotton area is driven by relative returns as
producers respond to a jump in prices in 2016," Mr Johansson said, noting "solid
For cotton, "expected prices and returns remain competitive
with other crops including corn, soybeans, and sorghum".
Analysts had expected the USDA to unveil a cotton sowings
figure of 11.08m acres.