Apr 14, 2017
The March 31st 2017 Prospective Plantings released by the National Agricultural Statistical Service confirms previous estimates that 90.0 million acres will be planted to corn in the spring of 2017. This is approximately 4% less than the previous year.
The area to be planted to soybeans in 2017 will increase by 7% to 89.5 million acres. The switch from corn to soybeans is driven by an anticipation of higher margins given prospects for more favorable soybean prices which will generate greater income after seed, fertilizer and preparation costs compared to corn.
A secondary consideration is the quantity of corn to be available from Brazil, Argentina, India, the Ukraine and South Africa which will depress U.S. exports lowering domestic prices.
An additional concern concerning corn is the possibly of amending the RFS to disfavor domestic diversion of corn into ethanol. Increased ethanol capacity worldwide has dampened the demand and hence price for ethanol. With a 10% blend ceiling, the manufacturers of ethanol are forced to export surplus over the quantity that can be used to dilute gasoline.
(See USDA projections of planting and harvest of soybeans and corn in the April WASDE Report in this edition)