Producers have been busy trying to get the 2020 corn crop planted, but many have had difficulty and have been switching over to soybeans, meaning final 2020 acreage numbers may be lower than what was indicated in the March planting intentions report.
“I think everyone has accepted that the Northern Plains is going to be down on acreage, so that’s not going to be a surprise,” said Betsy Jensen, Northland Farm Business Management and a producer/marketer from Stephen, Minn. “But overall, when you look at crop progress, we’re doing fine when it comes to overall (corn) plantings in the U.S.
“My concern with farmers in our neck of the woods is that they’re going to think that their inability to get their corn in is the problem, and it’s not a problem for the U.S.,” she continued. “The reduction we’re going to see in Northern Plains acres doesn’t equate to our larger rally in overall corn prices, so we could have a very serious case of ‘backyard-ism’ this year. I just urge farmers to remember that what’s occurring in their backyard with the change in corn acres is not what’s going on in the U.S. as a whole.”
Jensen estimates that corn acres are going to be down 1-2 million acres from the March report, which was a “huge number” for corn acres.
“Corn is still kind of bearish,” she said. “We have had some good news like gas prices going up, so there’s hope for ethanol. It’s not all bad news. Our crop conditions are amazing. Yes, we’re going to lose some acres, but it’s still kind of a bearish scenario right now for corn.
“When you look at the futures market, we’re under $3.50 a bushel. Corn is not a bullish market at this time,” she added.
Demand for corn has been “okay” and the U.S. is on track to meet USDA’s export sales goal, “give or take a few bushels here and there.”
“So that’s great news. But it’s the domestic demand that has a lot of people concerned.
We just want to make sure we can use some bushels for ethanol,” she said, adding that some ethanol plants are starting to come online again, but it’s been very slow.
“But remember, this is a futures market. So looking ahead we are hoping that the ethanol market will begin to pick up again,” she said. “It’s not bullish today, but we’re hopeful that in the next coming weeks that the higher gas prices will trigger some ethanol use and things will start to look more normal as they did before the pandemic.”
Total export sales are lower than what they’ve been in recent years. As of the end of May, the U.S. was going to export 1.775 billion bushels (BB) of corn, which is down significantly from where we were two years ago.
“We’re looking to export over 2 BB for this coming year, and so even though I think we’re meeting our export target, it’s a really bad target,” Jensen said. “We put the bar pretty low, so I struggle to be too bullish when it comes to that export number.
“I think that one of the things we’re looking at right now is crop condition, and at this time about 75 percent of the U.S. corn crop is rated in good-to-excellent condition,” she continued. “A year ago we were under 60 percent. When we’re looking at how good the crop looks, it’s looking very good this year – so far.”
USDA has quite a few reports coming up in June, including at the end of the month when it releases its final crop acreage report, “so there’s still quite a few fireworks that are going to occur in this corn market,” she said.
As for marketing recommendations for producers, Jensen said that old crop corn is a concern.
“We have had a rally in corn. It’s not very exciting, I understand that, but if you have old crop – June 30 is probably about the deadline for you to be holding on to old crop,” she said. “So be watching for a few weather scares.
“Corn is very difficult to be bullish right now,” she concluded.
At one local elevator in west central Minnesota regularly followed in this column, corn prices were $2.92 cash and basis was -35 cents under as of June 9. October 2020 corn futures were $3.42 and basis was -5 cents under.