The US Department of Agriculture (USDA) has released a report that says expected corn planted acreage for 2008 was down seven per cent to 87.3 million acres, while corn harvested was down nine per cent to 78.9 million from 2007.
Corn prices fell at the start of the week when the USDA released its report, surprising traders by reporting that farmers had tried to make money from the soaring corn demand for ethanol by planting more acres of the crop than expected by the market.
The USDA report says that farmers planted over a million additional acres of corn than what was expected to be planted in March. That takes the wind out of the sales of at least some of the inflation potential of the Midwest flooding. Corn futures prices fell in the wake of Monday's report. The nine per cent drop in corn harvested was attributed to the Midwest flooding that damaged a portion of the crop.
Analysts say that grain prices will have less of an impact on food inflation than other factors, though food prices would still be impacted by rising costs for distribution and fuel. Food costs went up by around four per cent in fiscal 2007, and analysts predict that they could go up to as a high of six or seven percent.
Expected soybean acreage was up 17 per cent to 74.5 million acres, and soybean harvested was up 15 per cent to 72.1 million acres. Soybean stocks were reported at 676 million bushels, a little lower than expected, and yield-reducing weather problems are anticipated to impact soybean prices.
The USDA is likely to readjust the data in its August report, once actual yields are clearer. Sources say that farmers can be sure to see continued volatility in markets till crops are in their reproductive stages, and reports yield better estimates.
The USDA report said spring rainfall totalled 20 inches or more (150 per cent of normal) from eastern Oklahoma into the lower Ohio Valley, disrupting planting and other spring field work.
It said the planted acres dropped in nine of the 10 major corn producing states partially because of high fertiliser prices, favourable prices for other crops, and a return to normal crop rotation. Harvest acres, if realized, will be the second highest since 1944.