U.S. farmers put off by grain gluts that have dragged prices lower are planting less corn and soybeans this year, the nation’s two biggest crops.
Soybeans will cover 89 million acres in 2018, while corn may be planted on 88 million acres, the U.S. Department of Agriculture said Thursday in a report in Washington. The USDA forecasts for each came in below the lowest prediction in a Bloomberg survey of analysts. The Bloomberg Grains Subindex climbed as much as 3.1 percent, the most since July.
Soybean acreage in the U.S. this year will exceed corn plantings for the first time in 35 years, according to the government survey. Still, prices for the oilseed jumped as the lower-than-expected plantings outlook raised concerns over tighter supplies amid drought in Argentina.
Farmer Surveys
The planting estimates are the USDA’s first forecast of the year based on farmer surveys. With seeding a few weeks away in most Midwestern states, price swings and weather can spur changes in the outlook. In February, the agency projected corn and soybeans would each cover 90 million acres.
Last year, U.S. farmers planted 90.2 million acres of corn and 90.1 million acres of soybeans.
The USDA survey comes at a time of rising trade tensions and heightened anxiety for U.S. soybean farmers. China is said to be studying the potential impact of trade restrictions on the commodity, people familiar with the matter said in February. An editorial published last week in a newspaper affiliated with China’s ruling Communist Party criticized alleged dumping of U.S. production. Still, the commodity has yet to be targeted. Analysts at Citigroup Inc. and JPMorgan Chase & Co. have said this week that China probably won’t impose tariffs on U.S. soybeans.
U.S. soybean production was valued at $40.9 billion in 2016, according to the American Soybean Association. Chinese demand has grown in importance for exporters: The nation’s purchases have more than doubled in the past decade, bolstered by an expanding hog herd and pork consumption.
The only other time that soybean planting topped corn was in 1983, near the beginning of a farm crisis that culminated in relief efforts such as Farm Aid. Faced with a wave of foreclosures in rural America, the government discouraged corn growing to help ease a grain glut.