Informa Economics Cuts Estimate for U.S. Swing From Corn to Soy
Ahead of the next anticipated report from the U.S. Department of Agriculture (USDA), Informa Economics has lowered its estimate for 2015 U.S. corn sowing by 75,000 acres to 88.54 million acres compared to the USDA’s latest outlook of 89 million acres. This indicates a drop of 2 million acres year on year. However, the group has also made a more significant cut to its estimate for U.S. soybean planting of 547,000 acres to 87.49 million acres - although this figure is still 3.8 million acres above last year and a record high.
In contrast, Informa notes the increasing popularity of sorghum, due to its current high prices and low moisture needs. The group has raised 2015 U.S. sorghum planting estimates by 601,000 acres to a total of 8.2 million acres, with particular increases in planting forecast in the Southern Plains region. Kansas and Oklahoma have been dealing with increasing drought conditions, and the effects of winterkill, which have reduced autumn plantings, leaving farmers with more acreage to plant this spring in either sorghum or soybeans. The USDA expects farmgate prices of sorghum to exceed those of corn this season, supported by high export levels, which have more than doubled so far this season to 4.5 million tons.
Informa’s notable downgrade to its estimate for soybean sowing comes after a reduction in the ration between November soybean futures and December corn futures which has fallen to 2.28:1 compared to 2.39:1 at the beginning of the month. The ration is indicative to farmers of the future financial incentive for spring planting of each crop.