ST. LOUIS (AP) — Farmers planted an unexpectedly large crop of corn and soybeans this year, easing some fears of rising food costs.
The U.S. Department of Agriculture said Tuesday a record 77.5 million acres of soybeans were planted through June, up 1.8 million acres from last year. Farmers also planted 87 million acres of corn, up 1 million acres from last year and the second-largest corn acreage in more than 60 years.
The unexpected boost in planting could mean crop supplies won't be as tight this year as many analysts feared a few months ago. Lower commodity prices would be welcomed by ethanol makers and meat companies that have been stung by higher feed prices over the last two years.
The USDA also reported a bigger supply of corn reserves on hand than many analysts expected. About 4.27 billion bushels or corn are stored on farms and grain bins, up 6 percent from last year and above the 4.18 billion bushes analysts had predicted, according to CME Group, with the Chicago Board of Trade.
The boost in supply is reinvigorating ethanol producers, who are slowly starting to ramp up production and look at reopening plants that were shut down last year when grain prices skyrocketed and oil prices crashed, said Brian Basting, commodity research analyst at Advance Trading Inc. in Bloomington, Ill.
"It appears to be a slow healing process" in the ethanol industry, Basting said. "We're seeing the (profit) margins creep back into positive territory."
The robust planting came as a surprise after rainy weather in the eastern Corn Belt caused farmers to delay planting because the ground was too soggy. But losses in those states appear to have been offset by perfect weather in western states like Nebraska, Iowa and Minnesota, said Greg Wagner, senior commodity analyst with Chicago-based AgResource Co.
"Those crops, at least today, are looking in great condition," Wagner said. But he warned late planting in several states could still make this year's crop susceptible to drought or heavy rains. "We know these crops are lagging in maturity, so we need to find out what the weather patterns are going to be."
Cotton planting, meanwhile, was at a 25-year low. Farmers planted about 9 million cotton acres this year, their fewest since 1983, with growers in Mississippi and Louisiana planting their smallest acreages on record. There was also a 46 percent decline in upland cotton acreage in California, where scarcity of irrigated water has been a persistent concern.
Nationally, cotton acreage was down from nearly 9.5 million acres in 2008.
"It's pretty easily explained in that cotton is probably the most expensive crop to grow (in Louisiana), and ... the price is just in the tank," said Sammye Crawford, deputy director of the state's branch of USDA's National Agricultural Statistics Service.
The full toll of the abnormally dry and drought conditions isn't clear yet in Texas, which accounts for more than half the country's total cotton acres. Acreage in the state was down slightly this year, to about 4.9 million.
USDA is forecasting increased cotton acreage in several states, including Arizona, Tennessee and Georgia.
Global financial woes have made consumers more cautious in their spending. But Gary Adams, chief economist for the National Cotton Council, said a "fairly substantial drawdown" of bales on hand domestically over the marketing year could be a sign that the outlook for cotton is improving.