Feds to announce farmers' bets on crops
Even before it's released, the report has caused economic gyrations in the agricultural world. The planting report gives the first hint of future grain supplies in the U.S.
Supplies are a major factor in determining grain prices. The planting report is so important that traders try to guess what it will say. That guessing has lead to large daily price swings in grain markets.
Southern Minnesota farmer Dan Rosenberg has been watching it all from his home near Fairmont.
"The first thing in the morning you do is you boot your computer up and check the overnight markets," said Rosenberg.
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Lately, those grain markets have been mostly rising at a rapid pace, though they have dropped significantly at times. Corn and soybeans have more than doubled in price in the last 18 months.
Grain prices help determine what Dan Rosenberg and other farmers choose to plant. Based in part on what he's seen on his computer screen, Rosenberg intends to plant a little less corn this year.
"I think we're go a little stronger to the bean side," said Rosenberg. "Probably 700 acres of beans and 500 acres of corn, I think I'm going."
Most grain traders believe that Rosenberg is part of a trend. They expect today's planting report to show that U.S. farmers will increase their soybean acres this year. Crop consultant Bob Wolf said that's what he's been hearing around southern Minnesota.
"I'm guessing it's somewhere in the 5 to 10 percent range of switching back from corn to soybean," said Wolf.
It just makes you cringe when you pay the check.
One explanation for more soybeans is that it's a reaction to higher planting costs. Even though both corn and soybeans are profitable, some farmers are switching acres to soybeans, because they are cheaper to plant.
Corn costs almost twice as much as soybeans to put in the ground. For one thing corn requires more fertilizer. Crop consultant Bob Wolf said fertilizer and practically everything else farmers use to plant a crop has risen in price from last year.
"Petroleum products, fertilizer products have all increased. There's been some increases in the seed area. Even some talk on some of the herbicide products increasing," said Wolf.
Some of the jumps have been extreme. Certain types of fertilizer cost twice as much as last year. For farmers, paying more for planting supplies means taking a bigger financial risk. Southern Minnesota farmer Dan Rosenberg said that's scary.
"Just takes a while to get used to it you know. You get all these price increases, and then it just makes you nervous. You know the profit's there, but you're still just nervous about it," said Rosenberg.
The rising costs might reduce profits. Last year was a great one for farmers. A survey of about 2600 Minnesota farms showed a median 2007 profit of $105,000, a gain of over 70 percent from 2006.
Rising grain prices contributed a large share to those profits. Ethanol production pushed corn prices way up. In turn, that caused the price of other grains to soar as well. Those rising prices affected consumers. Food prices have increased five percent in the last year.
The grain and food price turmoil has attracted attention in Washington. It's spurred speculation that something might be done to cool off grain markets and lower prices. President Bush said cattle producers were complaining about high corn feed costs. Bush said, "We're going to do something about it". But so far he hasn't offered any proposals.
