US farmers will sow even more cotton and soybeans than investors had expected, encouraged by weak grain prices which are set to send wheat area to a record low, and drive 3.6m acres out of production altogether.
The US Department of Agriculture, at its annual Outlook Forum to kick off formally 2017-18 estimates, forecast US soybean sowings this year rising by 4.6m acres to a record 88.0m acres.
The increase in area, to a level above the 87.58m acres that analysts had expected, reflects soybean prices which have so far this month averaged nearly 2.6 times as much as corn, the main competitor in US farmers' spring plantings programmes.
"The last time the ratio during February was this favourable to soybeans was in 1997," Robert Johansson, USDA chief economist, told the conference.
Feed grains out of favour
Corn sowings were, losing out to soybeans, forecast falling by 4.0m acres to 90.0m acres, a bigger drop than expected by investors, who had expected the figure to come in at 91.05m acres.
"We are likely to see fewer acres planted to corn, rice and other feed grains," Mr Johansson said.
This decline was also extended to wheat, in which overall plantings were pegged at 46.0m acres – down 4.2m acres, and the smallest area on records going back a century.
The figure implies a drop in spring wheat sowings, as well as winter wheat plantings, were revealed last month to have tumbled by 3.8m acres to 32.4m acres.
'Increase in idled acres'
Mr Johansson highlighted the dent to growers' enthusiasm from weak agricultural commodity prices which have left US farms overall looking at net farm income of $62.3bn this year – half the levels seen as the 2013 peak.
"Lower commodity prices will likely lead to reduced planted area," seen falling for the eight top field crops combined by 3.6m acres to a multi-year low of 249.8m acres.
"Lower crop returns will push some area out of production," besides encouraging farmers to switch crops.
"We expect to see an increase in idled acres – acres that had been brought into production as commodity prices rose through 2012."
Cotton in vogue
However, cotton, besides soybeans, was forecast bucking the downward trend in sowings, with US plantings seen soaring by 1.4m acres to a four-year high of 11.5m acres, encouraged by higher prices.
"The rebound in cotton area is driven by relative returns as producers respond to a jump in prices in 2016," Mr Johansson said, noting "solid export demand".
For cotton, "expected prices and returns remain competitive with other crops including corn, soybeans, and sorghum".
Analysts had expected the USDA to unveil a cotton sowings figure of 11.08m acres.
