Corn and Soybean Demand and Acreage Prospects for 2012

The economist said that a case can be made for a large increase in harvested crop acreage in 2012 compared to harvested acreage in 2011. “The magnitude of the increase will be influenced by planting and growing-season weather. The ongoing drought conditions in the Southwest and expanding dry conditions in the western Corn Belt underscore the uncertainty about 2012 production prospects,” he said.

In addition to total acreage, the market will continue to form expectations about acreage of individual crops. Currently, futures prices for the 2012 corn crop are 35 to 45 cents lower than prices for the 2011 crop. Futures prices for the 2012 soybean crop are 10 to 25 cents higher than the prices for the 2011 crop, he said.

“The price structure implies that an increase in U.S. corn production is expected in 2012. That increase is expected to begin with an increase in planted acreage. Acreage prospects for 2012 will unfold slowly, starting with the USDA’s Jan. 12, 2012, Winter Wheat Seedings report followed by the March 30, 2012, Prospective Plantings report,” he said.

Given the considerable uncertainty about 2011-12 marketing year consumption and 2012 production prospects, December corn futures should find some support near the early October low of $5.70, and nearby soybean futures are finding support near $11, he added.