The release Monday morning of the Agriculture Department’s report on farmers’ plans, based on interviews with growers during the first two weeks of March, caused the price of corn in the commodities markets to rise past $6 a bushel for the first time, before falling back. Soybean prices, meanwhile, fell 70 cents to $10.89 on expectations of a greater supply.
The commodities markets have been extremely volatile recently, with prices swinging more widely in a few days than they used to move in a year. Overall the trend has been sharply upward, making for an uneasy winter.
Consumers are confronting sticker shock at the grocery store, while farmers insist they are not getting rich because their own costs, like diesel fuel, are up. Wheat and soybean stockpiles have fallen in the last year, the government said in a separate report, meaning there is little buffer if the weather is not favorable this year and harvests are disappointing.
“We’re hoping for good yields,” said David Orden, a senior research fellow at the International Food Policy Research Institute in Washington. “If we get bad yields and tight commodity markets are pushed even tighter, we’ll get food prices skyrocketing, inflationary pressures and food riots in developing countries, and countries cutting off their exports.”
Many of those unfortunate trends, Mr. Orden said, are happening already.
Soybean producers told the government they would plant 74.8 million acres, up 18 percent from last year and just below the record high in 2006. Corn growers said they would plant 86 million acres, down 8 percent from 2007.
The soybean number was a little higher than analysts had been predicting, while the corn number was a little lower. The 2007 corn crop was the biggest since 1944 as growers rushed to capitalize on the government-mandated demand for ethanol. Three years ago, before the ethanol mandates, the price was less than $2.50 a bushel.
“In February, we were thinking farmers would plant as much as 90 million acres of corn,” said the Agriculture Department’s chief economist, Joseph Glauber. But the relatively high prices of soybeans might have caused some of them to switch. Soybeans also require less fertilizer, another commodity whose prices have been breaking records.
Mr. Glauber cautioned that the planting report not only reflected the intentions of farmers, but could affect them too. Last year’s report underestimated actual corn plantings by three million acres. A rise in corn prices and a drop in soybean prices might inspire other farmers to change their minds.
That is what the ethanol industry is hoping. “We do certainly use corn and it is going to have an impact,” said Bob Dinneen, president of the Renewable Fuels Association. “But I’m sure the marketplace will respond to this signal.”
Joe Victor, an analyst with the market research firm Allendale, said he expected corn to rise as high as $7.50 by summer.