USDA crop report expect to show boost in corn, soybean acres

Ahead of the Bell: Crop Report

KANSAS CITY, Mo. — The Agriculture Department will release its spring crop forecast Wednesday, with farmers expected to boost their plantings of corn and soybeans.

If plantings increase, it could boost crop reserves and ease a shortage that drove grain prices to historic highs in 2008. While that most likely wouldn’t translate to lower grocery prices right away, it could deliver relief to meat companies whose profits suffered due to higher feed prices.

“It would be something that the livestock and poultry industry would be delighted to see,” said Greg Wagner, senior commodity analyst at Chicago-based Ag Resource Company.

Farmers are expected to boost the number of corn acres by 2.5 million acres to 89 million acres, while soybean farmers are expected to boost production roughly 1 million acres to 78.5 million acres, Wagner said. If that happened, it could increase year-end reserves of both grains, boosting confidence in the markets that food shortages won’t return.

While grain prices could drop with higher supplies, it can take months or longer for prices to drop at the grocery store. That’s partly because raw-ingredient costs are just a fraction of grocery store prices, with transportation and marketing costs making up the majority.

Still, a boost in supplies could bring food prices down after they spiked two years ago, when unprecedented demand from the biofuels industry, and overseas importers like China and India, pushed up prices.