Are you planting more corn or more soybeans than last year? Are you planting equal amounts? Are you changing your cropping patterns at all? The market is certainly bidding for your acres, based on a variety of fundamental forces that are pushing and pulling on Cornbelt crops.

Cash corn is at the $5 mark at some locations. March soybean futures are nudging the $14 mark, which Purdue marketing Specialist Chris Hurt says is overpowering the corn market. In his latest newsletter for soybeans, Hurt says expected returns per acre are nearly $30 higher for soybeans than corn on average Midwestern soils. Subsequently, he’s expecting the USDA’s Prospective Plantings Report at the end of March to show excessive soybean acreage planned for 2008. If so, that would be bearish for the bean market, and would make farmers who forward contracted beans prior to March 31 look pretty smart.

Some of the fundamentals to be watched in the soybean market include exports, which are running ahead of last year and the old crop carryout which is down to only 19 days of supply. Reports about the South American soybean crop will soon be confirmed, along with reports of adverse weather that may hurt the crop size.

Sellers of soybeans have usually had good opportunities in the March to May window, and Chris Hurt recommends moving to 40% of old crop beans sold by that time, moving up to the 80% level before the end of May. For the new crop, Hurt suggests being 30-40% sold by June. While Hurt has suggested that soybean prices may reach $15, he urges farmers to utilize crop insurance to protect that revenue opportunity, despite higher premium costs.

As noted previously, Purdue’s hurt believes corn prices are too low, relative to soybeans and he believes corn acreage will drop 5% from last year if it does not increase 20¢ to 30¢ per bushel. But right now, he’s betting the March 31 plantings report will predict corn acreage to be far too low, according to his latest corn marketing newsletter.

The export market remains positive for corn despite the current prices. While the livestock producer has financial stress, there are few signs of a cutback in production. And Hurt says the carryover into the 2008 marketing year will be tight and will keep prices high.

To take advantage of those prices, Hurt wants farmers to consider using the February to May period for reaching the 80% sold level, and having 30% to 40% of the new crop forward contracted by planting time. He’s concerned about the potential for warmer and dryer weather this growing season. Given that fact, Hurt is pushing farmers to consider revenue style crop insurance to protect pricing opportunities, despite premium costs.

Supporting Chris Hurt’s concerns about having sufficient supplies of the right type of grain is Missouri marketing specialist Melvin Brees. In his latest marketing newsletter Brees says the market is trying to reconcile the needs of processors in 2009 with acreage and yield yet to be determined in 2008. And that debate over acreage will impact every corn and soybean producer in the Cornbelt. Brees also points to the March 31 Prospective Plantings Report as an indicator of how well the market has convinced farmers of how much acreage to devote to corn and soybeans. But the success will not be known until the report is released.

A year ago, the market had to flip-flop between the intentions report and planting time, or an insufficient amount of corn would have been produced in 2007. The market adjusted after the report, and Brees says 93.6 million acres of corn were planted with nearly the entire amount expected to be consumed in the current marketing year. He says corn cannot afford to give up many acres to beans in 2008, even though soybean use will exceed production in the current year and more soybeans will be needed in 2009.

In the middle of the corn and soybean acreage battle is the wheat market, which has the smallest supplies in 60 years. But less wheat was planted than the marketing expected, so prices remain high, which Brees says should entice spring wheat producers.

Worldwide, grain stocks are low as economies grow and increasing populations demand more and better food. That dynamic, combined with the low value of the US dollar, has fostered exports to levels that will reduce US stocks to low levels. And Brees says that will signal continued strong prices.

Summary:
Tight world supplies of grain, which result in increasing US export business, have caused domestic stocks to decline as well. The US market is bidding prices higher, buying acres for corn and soybeans in particular, but also for spring wheat. Consequently, prices will remain strong until the Planting Intentions report, which may indicate excessive acreage of one crop and insufficient supplies of another. The timing of the report, estimates of Brazilian soybean production, and the annual spring bounce in the markets will combine to provide farmers good marketing opportunities in the next few months.