USDA projects 8 percent drop in corn acres in 2008; soybeans up 18 percent, wheat to rise 6 percent

The U.S. Department of Agriculture (USDA) released 2008 report on crop plantings, projecting that US corn acreage would drop 8 percent to 86.0 million acres. Soybean production is expected to rise 18 percent to 74.8 million acres. Wheat production will rise 6 percent to 63.6 million acres. “This news is inherently bullish for corn, as it indicates that last year’s record corn crop will almost certainly not be repeatable this year,” said Pavel Molchanov, analyst for Raymond James, in a note to shareholders.  “Following today’s report, corn futures for the next two years rose an average of 2-3%, with several 2009 contracts now above $6.00/bushel. For context, we are currently projecting an average price of $4.95 in 2008 and $5.15 in 2009,” Molchanov said.

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