Farmers will be planting even less corn than expected as the soybean takes its turn as the darling of agriculture this year, according to a key government report released Monday that also points to higher food prices at the supermarket.
Corn acreage will fall to 86 million acres this year, down 8 percent from last year's ethanol-fueled record, while soybeans are expected to hit 74.8 million acres, an 18 percent increase.
The numbers are contained in the Agriculture Department's annual March plantings report, the bellwether for farmers' intentions for the growing season ahead.
For investors, analysts see the report pointing to a selloff in soybeans, and subsequently lower prices, due to the sharp increase in supply. Corn prices, meanwhile, could trend higher as supplies slip and demand remains relatively steady.
Consumers, meanwhile, are likely to continue to see higher food prices due to the increase in corn costs. Corn and its byproducts, especially high-fructose corn syrup, are used widely in the food industry.
"Demand is staying constant," said Kevin Kerr, editor of Resource Trader Alert. "We think we're just going to see another ratcheting up in prices. You could have real tough increases for consumers."
Corn opens today near its all-time high at $5.60 a bushel, while soybeans are at a still-strong $12.67. The crop report could trigger yet more volatility in coming weeks with agricultural commodities, especially soybeans.
"This is more bearish than most expectations," Kub said of the soybeans estimate. "They have expanded the (trading) limits so I wouldn't be really surprised if we got a herd mentality and lots of long liquidation on beans."
- Video: Emily French of Macquarie Bank analyzes the USDA report (3 mins, 29 secs)
Analysts, though, cautioned against reading too much into the corn decrease as the crop still is expected to be strong against historical standards.
"The temptation is to compare these numbers to last year's numbers, and I don't think that's the best thing to do because last year was an anomaly," said Elaine Kub, an analyst at Omaha, Neb.-based DTN consultants. "Basically, everything is up."
The Agriculture Department numbers only express intentions and are still subject to change depending on a variety of factors, particularly rain, which would be hardest on corn as it is the most weather-sensitive crop. A wet spring could lower corn yields, causing prices to surge.
"We were a little surprised. We're long corn, so we're quite happy with this report," Kerr said. "But this is not a very good report to base long-term strategy on. ... We typically pay more attention to weekly progress reports."
The soybean crop could total 3.1 billion bushels, the third largest on record, and corn plantings could yield 12.2 billion bushels, the second largest, based on the USDA's projected yields and the usual amount of shrinkage from plantings to harvested area.
Investors also will be paying attention to wheat, which has shared in the commodities boom thanks to swelling global demand cased by emerging markets and drought in some high producers.
Wheat plantings of 63.8 million acres, up 6 percent, could produce a crop of 2.3 billion bushels. At the same time, cotton plantings would tumble by 13 percent, to 9.39 million acres, the smallest plantings since 1983.
-- Reuters contributed to this report.