Washington, 19 February 2010

US farmers can expect a record corn crop this year and another huge soybean harvest, with China a hungry buyer again and possibly on track to become the number one export market for U.S. agriculture in the next few years. At its annual Agricultural Outlook Forum on Thursday, the U.S. Agriculture Department raised its forecast for farm exports in fiscal 2010 to $100 billion -- up from its November estimate of $98 billion and higher than 2009 trade estimated at $96.6 billion -- as world demand begins to recover from recession.

The growth will be led by soybeans. For the first time, China is expected to be the third largest market for U.S. products, passing Japan, according to Jim Miller, USDA's undersecretary for trade.

"No other country over the past several years has seen as much growth as China," Miller told the conference. "At the current rate China could pass Mexico and Canada as our leading market for exports in just a few years."

Abundant crops at home and abroad will weaken prices somewhat, said USDA's chief economist, Joe Glauber. "But because of strong domestic and (world) demand, prospects still remain high relative to historic lows," Glauber told the conference.

U.S. farmers will plant 89.0 million acres of corn this year, up from USDA's previous forecast of 88 million acres, along with 77.0 million acres of soybeans, up from a prior forecast of 76.5 million acres, the USDA said.

If the forecasts hold, farmers will harvest a record 13.2 billion bushels of corn, eclipsing the record set in 2009, and 3.26 billion bushels of soybeans, the second-largest crop ever, trailing only the 3.36 billion bushels of 2009.

"The great thing about American agriculture is how extraordinarily productive it is, so it wouldn't surprise me if we have another great crop," U.S Agriculture Secretary Tom Vilsack told Reuters Insider.

USDA projected wheat sowings at 53.8 million acres during 2010, down from its previous estimate of 55.0 million. Some traders said the USDA forecasts, which were slightly smaller than previous guesses by analysts, were considered mildly bullish for grain and oilseed futures, but attention quickly turned to bumper crops in South America and large world stocks.

Futures at the Chicago Board of Trade closed on a weak note with corn and soybeans losing less than 1 percent. Projections from the annual forum, made before farmers finalize spring planting decisions, have often been close to the final size of the soybean crop but less accurate on the corn crop. USDA's first survey of planting intentions is slated for release on March 31.

Glauber said the rapid increase in the corn-based ethanol sector will slow in 2010, pressured by a 15-billion gallon cap. But the ethanol sector should remain profitable due to lower grain prices and higher fuel prices, he said.

Trade Spats Hang Over Outlook

Steady economic growth fueling its demand for meat has propelled China's demand for soybeans in recent years.

"With a country as big as China ... you've got to expect that you're going to have rather insatiable growth," said Al Ambrose, a trader with CHS Inc, on the sidelines of the conference.

The two countries have been embroiled in a series of trade disputes this year, including a ban on each other's poultry exports, but that shouldn't be too great a concern, he said.

"It's spats between lovers, it doesn't break up the family," Ambrose said. An ongoing meat trade dispute with Russia continues to pose challenges, U.S. Trade Representative Ron Kirk said.

"This is a huge negative hit. This is about a billion dollar hit to our pork and poultry producers," Kirk said. But it should be a faster fix than the poultry fight, USDA's Jim Miller told Reuters.

"It's a difficult situation but we believe there are ways we could reach an agreement on reopening our poultry trade with Russia," Miller said in an interview.

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