Global Food Prices Rose, Soybean Futures Surge in May 2012

Global food prices rose to an all-time high last year, triggering unrest in northern Africa and the Middle East. The United Nations said this month that grain imports by the world’s poorest countries will climb to a record in the 12 months ending June 30. The U.S. was the world’s biggest exporter of corn, soybeans and wheat last year.

Soybean futures for May delivery surged 3.5 percent to close at $14.03 a bushel on the CBOT, the biggest gain since Oct. 11. Earlier, the price touched $14.16, the highest since Sept. 12.

The price jumped 16 percent in the first quarter after dry weather reduced crops in South America. Brazil is forecast by the USDA to be the largest exporter this year, topping the U.S. for the first time.

Farmers may sow 73.902 million acres in soybeans, down 1.4 percent from 74.976 million last year and less than the 75.429 million expected by analysts. Seeding of wheat, including spring and winter varieties, may total 55.908 million acres, up 2.8 percent from 54.409 million a year earlier and lower than analyst expectations of 57.551 million.

“There is no question we will see higher food prices this year,” Steve Nicholson, a commodity procurement specialist at International Food Production Corp. in Fenton, Missouri, said in a telephone interview. “You have to see prices go up to stimulate global production and ration declining supplies.”

The soybean-seeding forecast was about 1.5 million acres below the average estimate of analysts and almost 1.1 million less than a year earlier. Farmers told the USDA that they plan to cut the planted area in seven of the top-eight producing states.

The USDA said in February that rising acreage may push U.S. corn production to a record, capping food inflation. Global food costs rose to an all-time high in February 2011, spurring unrest in northern Africa and the Middle East. Corn futures touched a six-month high at $6.7575 a bushel on March 19 on the Chicago Board of Trade. In June, the grain climbed to a record $7.9975 as U.S. stockpiles slid to a 16-year low.

At current prices, farmers in southern Minnesota can make about $130 per acre of corn, compared with about $60 per acre of soybeans, because corn crops yield more, said Tom Neher, a vice president at lender AgStar Financial. Soybean futures have surged 20 percent since the end of November, as adverse weather threatened South American crops. Four months ago, before the rally, farmers would have lost $60 per acre on the oilseed, Neher said.

“Soybeans have worked really hard to buy back more acres,” said Neher, who helps manage AgStar’s grain portfolio, worth $2.1 billion in loans and leases to farmers. “Soybeans are more in favor now than they were earlier, but there’s still a lot more profit to be made in corn.”

Farmers from Minnesota to Washington may plant 11.976 million acres in spring wheat, down from 12.394 million last year, the USDA said. Analysts expected 13.35 million acres of the grain, used to make bread and pizza dough. Durum wheat, used in pasta, may be planted on 2.223 million acres, up from 1.369 million last year, when floods swamped fields.