CBOT Shock

CBOT Corn Planting Intentions Shockers

On March 30, 2007 the USDA released their U.S. planting intentions.  The report sent shockwaves through the market.  What was surprising was not the change of direction in planting intentions, but the size of corn's increase.  The jump in corn planting intentions promptly lowered prices on the CBOT.  U.S. producers indicated that corn plantings were likely to increase from 12.1 million acres to 90.5 million, a 15% jump that exceeded trade expectations by 2.3 million.  The largest area increase will be for the western U.S. at plus 4.8 million acres. 

What prompted this dramatic jump in plantings? The growing number and capacity of Ethanol plants this past year and the high prices of last winter, but ultimately Spring's weather will determine if the hefty increase will occur.  2007 presents the potential for 90 million acres of corn plantings.  This is the highest since 1944.  The season however, is off to a wet and cool start and to build U.S. stocks corn yields would have to be above average. 

The current pull back of prices has reinvigorated financing of more ethanol plants in the long-term.