Rabobank: Down Year for Wheat and Soybeans

By Jim.Robinson|March 8, 2010

U.S. plantings of the three major crops — wheat, corn and soybeans — are expected to contract by 3.3 million acres year-on-year (YOY) for the fourth successive year as lower prices and unfavorable seasonal conditions combine, according to a Rabobank report.

Winter wheat plantings are expected to fall to their lowest level in 97 years ― the current USDA estimate of 37.1 million acres representing a 14 percent YOY decline. Part of this acreage is expected to be offset by higher corn, cotton and spring wheat plantings, but according to the USDA, some areas will not be utilized, which is surprising given that grains and oilseeds complex prices remain attractive relative to historical levels.

Demand expectations are mixed with stronger consumption expected from the ethanol, biodiesel and animal feed sectors. Demand for corn is expected to benefit most in 2010/11, with a modest recovery in export demand also expected. Wheat export demand is forecast to remain challenging, with intense competition and large global supply levels to temper a recovery in exports from their 38‐year low in 2009/10. US soybean exports are also expected to decline under the weight of pressure from a forecast record South American soybean crop.

World cotton production is forecast to rise by more than 10 percent in 2010/11, following an estimated 17 percent decline in world cotton stocks in the 2009/10 marketing year.

Following three years of successive acreage declines, U.S. cotton plantings are estimated to rebound by 10.5 percent YOY, with farmers expected to respond to a 95% increase in nearby ICE NY No. 2 contract futures prices from the same time last season.