By Katie Micik
DTN Markets Editor
OMAHA (DTN) -- Farmers are likely to increase corn acreage next year, private analytical firm Informa Economics said in a report.
Corn plantings are forecast to increase 90.8 million acres, up 2.8% from 2015's acreage. Informa's early acreage estimates are based on a profitability analysis and adjustments associated with a normal spring planting season.
Informa sees soybean acreage expanding by 1% in 2016 to 83.9 million acres as Missouri acreage rebounds from 2015's weather-reduced levels.
"Informa is projecting a year-to-year increase in corn-planted area of 2.4 million acres from USDA's 2015 estimate," DTN Senior Analyst Darin Newsom said. "Is the corn market actually working to buy that many acres? Not really, but the choices seem limited in 2016.
"As for soybeans, Informa is also projecting an increase of 697,000 acres from USDA's 2015 estimate of 83.2 million acres. Given the early dry weather in Brazil and continued growth of global demand, an increase in U.S. planted acres seems plausible."
Informa calculates net revenues for each crop based on historical and expected prices, trend yields and USDA's 2016 cost of production forecasts. By comparing the price of December 2016 corn futures to November 2016 soybean futures, Informa's data shows corn's premium to soybeans is $29 per bushel.
"Of the major row crops, corn currently has the highest implied net revenue return per acre, is up slightly versus last month and remains slightly above soybeans," the report stated. "Compared with last season, the current incentive to plant corn is slightly higher."
If Informa's acreage prospects are realized, 2016 corn production could total 14.1 billion bushels using a trendline average yield of 168.9 bushels per acre. Soybean production, using a 46.2 bpa average, could total 3.9 bb.
Newsom said both crops will struggle to remain profitable for producers in 2016-17 based on current price levels.
"The trend of Dec 2016 corn is sideways, while if I squint my eyes just right Nov 2016 soybeans looks to be in an uptrend. That being said, the SX6/CZ6 spread is also trending up, meaning beans could continue to gain on corn," he said.
"For what they're worth, most recent WASDE numbers show global soybean demand continuing to increase while global corn demand is expected to decrease in 2015-2016. These trends could carry forward into 2016-2017. And if South America has any kind of weather problems, putting soybean production in doubt, soybeans could need more U.S. production."
Informa noted that its forecasts are highly subject to change if there are any major changes in price trends or harvest prospects in South America.
Informa also sees cotton acreage set to rebound. Acreage is likely to increase by 13% to 9.6 million acres, up 1.1 million from last year, as farmers see better planting conditions and improved prices.
WHEAT
All wheat acreage is expected to decline by about 600,000 acres from 2015, according to Informa's survey of farmers. It's pegged at 54 million acres total.
Of that, winter wheat is likely to be planted on 39.3 million acres, down 157,000 from last year. Hard red winter wheat acreage is likely to increase from last year to 29.1 million, up 147,000 acres from last year. Soft red winter wheat is likely to be planted on 6.9 million acres, 174,000 below last year. White winter wheat acreage is expected to total 3.3 million acres.
Katie Micik can be reached at katie.micik@dtn.com
Follow Katie Micik on Twitter @KatieMDTN
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