Recent declines in U.S. corn futures prices have failed to dent growers' enthusiasm for planting the feed grain this spring, even though soybean prices have outperformed corn, farmers and analysts said.
Crop insurance guarantees, money spent on fertilizer and recent rainy weather in key growing areas have cemented the acreage decisions that farmers made in the fall.
The Chicago Board of Trade December corn futures contract , which tracks the crop that will be harvested this fall, shed 7.1 percent of its value over the first two months of 2013. That was the second worst winter performance for the new crop contract over the past 10 years.
The only bigger decline was in 2009, when new-crop prices dropped 13.4 percent in the January/February time frame. By the end of harvest that year, when farmers were delivering their crop to elevators and processors, futures prices were just 1 cent above their end-of-February level.
Farmers have already prepared most of their corn acreage by applying fertilizer, which is not necessary when planting soybeans. Those tractor trips across the fields last fall to apply fertilizer locked in the acreage for many farmers regardless of what the futures market has done this winter.
"We are not going to change because we already have the stuff down on our ground," said Garry Niemeyer, an Illinois farmer. "I think most farmers made their plans last fall and they are sticking to them. When you put anhydrous ammonia on or some form of nitrogen and you spend that kind of money, you are not going to plant soybeans."
Soybean prices also dropped during the first two months of 2013, but the declines were smaller than in corn as new-crop soy futures lost just 3.3 percent.
Still, most farmers think that corn offers a better return, even with the added expense of fertilizers and the higher seed cost.
"In terms of input costs, they aren't dramatically that different from last year," said Nicole Thomas, analyst with McKeany-Flavell. "They can still make a pretty good margin at the current levels."
Corn planted on high productivity farmland in central Illinois is projected to return a profit of between $603 and $678 per acre, depending on a farmer's crop rotation practices, according to University of Illinois research. Soybean returns were seen between $405 and $430 per acre.
Growers who have not had a chance to apply fertilizer to fields earmarked for corn will be closely watching the futures market during the next few weeks to see if it provides a further incentive to switch. But a quick harvest and dry weather across the Midwest last fall gave most growers the chance to prepare their fields for this spring, so there is not too much acreage in flux, Niemeyer said.
The U.S. Agriculture Department has projected 2013 corn acreage at 96.5 million and soybean acreage at 77.5 million. It will update its acreage outlook based on farmer surveys at the end of the month.
USDA's Risk Management Agency last week set floor prices for crop insurance policies at $5.65 per bushel for corn and $12.87 a bushel for soybeans across most of the U.S. crop belt.
Andrew Goleman, a farmer in Illinois who plans on splitting his corn and soybean acreage evenly, said that last year's drought, while devastating to the crop, made farmers more comfortable with crop insurance and confident about their acreage decisions for 2013. Many growers cashed in policies for the first time ever in 2012 because of the drought.
Recent rains across key growing areas of the U.S. Midwest have boosted much-depleted soil moisture levels and made farmers more optimistic about this year's crop as planting season approaches, also furthering their commitment to corn.
Soybeans fared better than corn did in last year's drought. Corn yields plunged to their lowest level since 1995 as the crop withered in the dry soils and scorching temperatures. (Reporting by Mark Weinraub; editing by Jim Marshall)