Grain stocks will provide an updated reading on domestic corn feeding, the largest source of demand for U.S. corn. Heavy movement of cattle into feedlots in the Plains, partly because of lack of wheat pastures, should be a positive influence on corn feed demand, although an extremely mild winter may be partially offsetting. While the projected increase in soybean plantings is possible, our projections have shown a more modest 0.5 million-acre increase, reflecting a slowing from the rapid increases since the start of Freedom to Farm agricultural policy. Since 1995, U.S. soybean plantings have increased about 11 million acres. A major swing factor in soybean plantings is the condition of the winter wheat crop in the plains states in late March and April.
Wheat is an extremely hardy crop and can still respond to modest rain in the next several weeks.
If good rains are not received from Texas to Nebraska, part of the wheat acreage may shift to soybeans, thus pushing plantings up near these projections. That would be negative news for new-crop soybean prices. A major and not widely understood change in the grain markets resulting from Freedom to Farm is in how the carryover stocks are being financed. Previous government programs financed nearly all of the carryover except for minimum working stocks needed to keep operations going at the end of the marketing year. Excess stocks above this pipeline level were financed by the Farmer Owned Reserve or by outright CCC storage.