By ANN HINCH
Assistant Editor

CHICAGO, Ill. — The abundance of corn and wheat stocks in American farmers’ silos shouldn’t terribly affect their ability to market the corn – but wheat is a harder sell, according to two Midwest market analysts.

Following last week’s release of the USDA’s annual Prospective Plantings and quarterly Grain Stocks reports, Dale Durchholz noted the big story wasn’t so much farmers’ planting intentions for this spring, as their grain stocks already on hand. In fact, the AgriVisor LLC senior market analyst explained abundant stores take some pressure off such a need to produce and give U.S. farmers some freedom in decision-making this spring.

“I don’t know a year like this year, that farmers had such a wide open opportunity to plant, as they do now,” he said, out of the last four decades.

Corn and beans
The USDA’s survey of farmers nationally shows that as of early March, they are intending to plant 88.8 million acres of corn and 78.1 million acres of soybeans in 2010. Each is just slightly more than last year’s production, though it would make the largest U.S. soybean planting on record.

Corn stocks are up 11 percent against this time last year at 7.69 billion bushels nationally. About 59 percent of this is on-farm stocks – also 11 percent higher than last March. Joe Victor, vice president of research/brokerage firm Allendale, said this is the biggest store of corn the United States has had in more than 20 years.

At the same time, though, he said the USDA is also anticipating the second-largest use of corn in the second quarter of the year, since 1967. No matter how attractive soybeans could be to plant this year, as a rotational or strictly cash crop, he believes farmers will stick to their current plans for corn as long as the weather holds out.

“You can make a lot of money with corn on a per-acre basis,” Victor said, predicting $4.20-$4.30 December 2010 new crop futures. (Durchholz sees $4.25 on the upside, but with a really good planting and harvest, suggested it could dip as low as $3.)

Further, the ethanol industry should be well supplied this year, according to the Renewable Fuels Assoc. A statement from the organization pointed out the corn stored on-farm alone right now in the U.S. is more than enough to meet current ethanol demand. It also stated acreage to meet corn demand is being met through crop-switching, not land use change.

“The one thing I’ve noted this year is that we’d probably see the total acreage numbers decline (in 2010),” Durchholz said, explaining when financial incentive is down (such as futures prices, government payments), there are fewer acres seeded.

According to the USDA’s survey, growers in Illinois and Indiana are expecting to plant 600,000 and 100,000 more acres of corn, respectively, over 2009; the intent to increase is also present in Michigan (by 50,000 acres), Kentucky (100,000), Ohio (350,000) and Tennessee (40,000).

But in Iowa – the nation’s most prolific producer – growers are planning 200,000 fewer acres of corn, or 13.5 million. The same survey shows the state’s farmers intend to seed 300,000 more acres of soybeans this year – at 9.9 million – than in 2009. This is also the most of any one state for that crop.

Illinois and Indiana, two other big soybean growers, intend to up their acres versus last year, by 100,000 and 50,000 respectively. Ohio and Michigan farmers also plan 50,000 more acres in each state, but Kentucky (by 60,000 acres) and Tennessee (by 140,000) will be scaling back on soybean planting.

With all the talk about a surplus of corn and wheat, the fact that soybean stocks are down only 2 percent from this time last year – at 1.27 billion bushels – is perhaps not big news. Of interest, as always at this time of year, is what the imminent Brazilian and Argentine harvest will bring; a prevailing opinion so far is that soybeans south of the equator will be plentiful.

Durchholz pointed out such a crop could be “a drag” on U.S. soybean exports. Soybean prices will also depend, he said, on if China’s and India’s economies continue to grow or slow down. He predicted farmers could see $9.50 futures on new-crop beans in 2010.

Victor’s upward estimate is $10-$10.50 soybeans. He was also more positive on the overall economy, however, and believes index fund investments in the commodities market will continue to go up, especially with respect to corn and soybeans. What he doesn’t believe will affect corn and soybean exports is the value of the U.S. Dollar. Victor said he recently finished a study of exports and Dollar value for 2010 so far, and could not find any correlation between the two.

Wheat
“We have an abundance of wheat,” Victor said, explaining there is only one month – February – in which wheat is not being produced somewhere in the world. “We’re not getting the job done on exports … or on domestic use.”

This year, farmers are on track to harvest 53.8 million acres, according to the USDA. This figure is down 9 percent from last year. Planting of winter wheat – what is primarily grown in the Corn Belt and Southeast – is down 13 percent from last year. The decrease is especially notable in Illinois, which went from 850,000 acres last year to only 350,000 this winter.

U.S. wheat stocks, however, are up a whopping 30 percent compared to this time last year, at 1.35 billion bushels. Exports of old crop wheat are down, Victor explained. Normally, the U.S. ships out nearly half of its wheat, but this year that figure is down to only 37 percent.

Weather
No matter what farmers intend to do, their planting decisions can be swayed by the weather – specifically, how wet it is when it comes time to fertilize the soil or plant the crop. While Durchholz doesn’t see actual soybean plantings increasing from the USDA’s survey estimate unless corn planting is pushed back really late this spring, Victor said two to three weeks of prohibitive conditions is all a farmer needs “to change on a dime.”

His advice to farmers waiting a day to see if field conditions improve is, “Get it planted today, even if it’s not the perfect seedbed, because 2010 looks a lot like 2009.”

“You tell me the weather over the next 60 days, I’ll tell you what the planting mix is,” Durchholz pointed out. Despite that impossibility, he made this observation: “What are the odds of a third wet spring in a row? In 100 we’ve not seen that in any weatherman’s memory.”