SAN FRANCISCO (Dow Jones) -- Soybean futures tumbled Monday after the U.S. Department of Agriculture said farmers intended to plant 18% more soybean acres this year, more than expected, as growers seek to take advantage of recently record high prices.

Soybean producers intend to plant 74.8 million acres, a big jump from last year though still 1% less than the record high acreage seen in 2006. Analysts were anticipating 69 million to 71 million acres.

Corn plantings are slated to fall to 86 million acres, down 8% from last year, when corn sown in expectations of increased need for corn-based ethanol expanded U.S. corn acreage to its highest level since 1944. Analysts were anticipating 86 million to 88 million acres.

Favorable prices for other crops, crop rotation and high input costs for corn are motivating some farmers to plant fewer acres of corn, the Agriculture Dept. said.

Soybean futures for May delivery settled 5.5% lower at $11.97 a bushel. May corn futures closed up 1% at $5.67 a bushel after rising as much as 5% earlier.

Wheat futures traded in Chicago closed 6% lower at $9.29 a bushel. The Agriculture Dept. said the entire wheat acreage will likely increase 6% to 63.8 million acres. The 2008 winter-wheat area is 4% higher than last year and is slightly higher than the previous estimate, the department said. It estimates spring wheat acreage will increase 8% to 14.3 million acres.

The government's report on planting intentions by U.S. farmers is a closely watched indicator for how much grain the U.S. -- the largest exporter of many grains -- will supply. The information affects exchange prices and the bottom lines of ethanol makers, fertilizer manufacturers, hog farms and corn sweetener producers.

Bad news for ADM, Tyson

The report is likely to put upward pressure on corn prices in the near term, a negative for several companies, said J.P. Morgan analyst Pablo Zuanic in a research report Monday.

He said higher corn prices are bad news for corn-product makers, including Archer Daniels Midland Co. (ADM) and Corn Products International Inc. (CPO), and livestock raisers Tyson Foods Inc. (TSN), Pilgrim's Pride Corp. (PPC) and Sanderson Farms Inc. (SAFM).

ADM shares ended down 2.7% to $41.16 after falling as much as 4.8% earlier, while the shares of Corn Products gained 0.8% to close at $37.14. Tysons, Pilgrim's Prides and Sanderson Farms shares accelerated their losses and closed down over 1%. The S&P 500 (SPX), in contrast, ended 0.6% higher.

On the flip side, big users of soybeans stand to benefit from the increased soybean acreage. These soybean users include hog producer Smithfield Foods Inc. (SFD), oilseed crusher Bunge Limited (BG) and companies that make biodiesel and cooking oil, Zuanic said.

Those companies' shares failed to get much of a lift, however. Smithfield shares recovered a bit to close 0.8% lower at $25.76, while Bunge shares ended 2.7% lower at $86.88.

Food makers have been coping with higher grain prices and passing along those costs to consumers. To offset surging costs for corn, wheat and soybeans, big food companies have been shutting down plants and selling less profitable brands.

Smithfield, which sells bacon and ham food products, said the costs of raising a hog rose to $49 per hundredweight for its quarter ended Jan. 27, up from $42 a year-ago. Its hog production unit reported an operating loss of $80.7 million, hurt by surging soybean meal costs.

Meanwhile, less land dedicated to corn may undercut chicken producers. Feed- grains account for close to 50% of the costs of raising a chicken.

Tyson plans to spend $500 million more to feed its chickens this year, while Pilgrim's intends to spend $700 million more for corn and soybean meal. Sanderson Farms is fully exposed to market prices for corn. It has hedged 10% of its soybean costs for the rest of the year.

The U.S. Agriculture Department forecasts average prices for wheat, corn and soybean meal will continue to hover well above their 10-year averages through 2008.

  (END) Dow Jones Newswires
  03-31-08 2313ET
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