Mumbai, March 30 - World agricultural markets are keenly looking forward to the USDA Prospective Plantings report for 2010 due for release on Wednesday (late evening in India).
The findings of the report may set a direction for the market over the next two months when actual planted acreage data are available.
Trading sideways
In recent weeks, agricultural markets have been trading sideways as there has been no major market moving development.
The southern hemisphere crop harvest conditions have already been factored in.
The Prospective Plantings report is based on a survey of the US farmers and is intended to be a guide. Major field crops planted are corn (maize), soyabean, wheat and cotton. The farmers' choice of crop will depend on several factors including anticipated weather conditions, absolute and relative performance of competing crops, input costs and yield expectations.
Fertiliser prices have fallen from their record highs of 2008 and that is a relief.
Will offer direction
When published, the findings would reflect the “stated intention” of the US growers about what crop to plant and in what acreage.
Often the deviation between intended acreage and actual planting data (to be available by June) is small. There is already some informed speculation about what the survey will throw up.
Clearly, there is competition for acreage in the US among the four major field crops. Cotton has steadily lost ground in recent years.
Corn and soyabean are two crops that vie for acreage. But the farmer's allocation will depend on his price expectation and the ratio between corn and soyabean prices for forward positions.
Crop rotation
Crop rotation patterns will determine much of the acreage across high yielding area, but there will also be additional acreage available this year due to lower winter wheat plantings and CRP land returning to production, an analyst commented.
There is widespread expectation of a rise in both corn and soyabean planting in 2010.
Last year, contrary to market expectation, corn plantings expanded to 86.5 million acres and soyabeans to a record 77.5 million acres.
No wonder, the US corn output in 2009 reached a new high of 333.5 million tonnes (previous year 307.1 mt), while soyabean production was at an unprecedented 91.4 mt (previous year 80.7 mt).
This year corn planted acreage may expand to close to 90 million acres, while for soyabean it may range between 76.5 million and 79.5 million acres, say analysts.
Weather holds key
USDA planting intention report is sure to provide a direction for the market.
From June onwards, weather will be key to market price direction. If the survey findings bear out market expectation, and if the actual final acreage numbers too tally with the survey, one can expect another season of record corn and soyabean crops in the US, subject to of course benign weather.
A record crop for the second year in a row is sure to cool the market sentiment. Wheat may lose out to some extent.
However, given ample supplies of wheat in the global market, the US crop size is unlikely to have a significant impact on wheat market prices.
by G. Chandrashekhar
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