Transcripts

Corn Crops Are Being Swaped For Soybeans

SUZANNE PRATT: Corn prices rallied today at the Chicago Board of Trade following the release of the government's latest crop report. According to the report, U.S. farmers expect to plant less corn this year and a record amount of soybeans. But as Diane Eastabrook reports, commodities analysts note that farmers don't always do exactly what they say.

DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Traders sent corn futures prices toward $6 a bushel in a fast market this morning, after hearing that U.S. farmers plan to grow fewer acres of corn this summer than expected. Even though prices retreated later, veteran corn trader Victor Lespinasse of grainalyst.com thinks they will bounce back quickly.

VICTOR LESPINASSE, CORN TRADER, GRAINANALYST.COM: I think we're going to see continued mercurial markets for a long time to come, especially if the weather continues to give us some cause for concern.

EASTABROOK: In a survey by the U.S. Department of Agriculture, farmers said they'll plant 86 million acres of corn this summer. That's about a million and a half fewer acres than analysts had forecast. The government also said there is a lot less corn in storage than many analysts had thought. Even before today's report, corn futures prices were double what they were a year ago. Soaring corn demand from developing countries and the grain-based ethanol industry is part of the reason. But analysts think the grain market could find a cure for higher corn prices. Terry Roggensack, co-owner of commodity research firm Hightower Report says slaughtering livestock to reduce feed consumption is one way. But that could take many months.

TERRY ROGGENSACK, CO-OWNER, HIGHTOWER REPORT: And that's going to take another six months or so before that works its way into the system as far as lower pork production.

EASTABROOK: James Bower, president of Bower Trading, says reducing government ethanol targets or mandates is another way.

JAMES BOWER, PRESIDENT, BOWER TRADING, INC.: Certainly if corn goes I would say above the $6.50 mark, heading, let's say, in a drought toward $8, they would absolutely have to look at the mandates. There is no question about it. Because the supply demand table just could not handle it.

EASTABROOK: Finally, farmers could always plant more corn than they said they would. If farmers decide they want to plant more corn, they don't have much time to do it. Analysts say that crop need to be in the ground by the end of April and with wet weather forecast over the next couple of weeks, that window of opportunity is narrowing. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Chicago.