Cold fears for corn to fuel jump in US soy sowings

Allendale raised the bar on forecasts for US soybean sowings this year, pegging them at 83.2m acres, as the hangover from the unusually cold winter adding to the incentive from prices to plant the oilseed rather than corn, the main rival in spring seeding plans.

The survey results come ahead of a USDA report on prospective plantings which is one of the most keenly awaited crop briefings of the year.

Chicago-based Allendale, revealing the results of a farmer survey, said that growers intend to hike plantings of the oilseed this year to 83.2m acres, up 6.7m acres on last year, and exceeding the 2009 record of 77.45m acres too.

The figure is considerably bigger than the 79.5m acres that the US Department of Agriculture forecast last month, besides estimates from other commentators, many of whom have warned that the official forecast looks too low.

Goldman Sachs this week pegged sowings at 81.0m acres, while Informa Economics has pencilled them in at 81.3m acres, and Jefferies Bache forecast a figure of 80.5m acres.

However, Allendale highlighted the incentive to sow the oilseed being provided by the harsh winter conditions, with soybeans having a later planting window. earlier this week highlighted the worries over seedings being prompted by low soil temperatures.

'Not confident enough on corn'

"We have some issues which are going to be impacting corn planting this year," Rich Nelson, chief strategist at Allendale, said.

"In recent months we have had quite a large snowfall this winter, which has been centred in the eastern Corn Belt, Illinois, Indiana and Ohio. Portions of those states have seen record snowfall."

 "A lot of farmers suggested they simply were not confident enough to be planting corn yet.

"So for right now, they were heavily sighted towards soybeans."

Key states

Indiana is "leading the way" in this trend in the eastern Corn Belt, Mr Nelson said, also noting a retreat in North Dakota, where poor weather has prevented farmers harvesting all last year's corn yet.

"After years of North Dakota adding corn acres almost year after year, and becoming one of the players in the mix, it looks like we will now see some resistance against that idea," Mr Nelson said.

The Allendale survey showed corn planting intentions of 92.3m acres, down 3.1m acres year on year, if still the fourth largest since World War II and, again, larger than the USDA foresees.

However, the figure was below the 93.3m acres at which Informa Economics has forecast US corn seedings this year, with Goldman Sachs foreseeing a 93.5m-acre result.

Key ratio

Besides weather conditions, relative pricing of Chicago corn and soybean futures is also seen as a key influence in farmers' decision making.

Jefferies Bache said that the "indifference level" for the ratio between new November soybean futures and December corn futures appears to be at 2.2:1.

The ratio at the close of trading on Thursday was 2.44:1, implying relatively high returns from soybeans.

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