Markets Try To Change Seeding Intentions

CHICAGO - Apr 4/06 - SNS -- International agricultural commodity markets remain relatively quiet, judging from the level of overnight activity reported into Tuesday morning. There are several tenders in the wings and a fresh tender to sell wheat announced by Syria, but little business reported.

Futures markets are paying closer attention to weather with seeding advancing northward in the United States. Rainfall events in the U.S. midwest are helping replenish soil moisture reserves in front of seeding, adding pressure to prices because it increases yield expectations.

Darrel Good, Extension Economist, University of Illinois suggests the weather is making it hard for markets to try to swing grower cropping plans away from what the USDA uncovered in its seeding intentions surveys.

"It appears that markets made a mistake by encouraging a planned shift from corn to soybean acreage in the U.S. in 2006, particularly the magnitude of shift currently planned. The market must now try to quickly remedy that mistake by encouraging producers to moderate the shift. Prices certainly moved in that direction after the report.

"At an average yield of 40 bushels for soybeans and 150 bushels for corn, the market on March 31 reduced the potential profitability of soybeans relative to corn by nearly $17 per acre. It appears that prices may need to continue to change in favor of corn over soybeans. In addition, if 2006 yields are near trend value, deferred futures prices are still overvalued by a considerable amount for both crops," Good said.

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