Corn

The “final” planted acreage report for corn wasn’t exactly what the market and producers thought it would be considering the planting difficulties this spring, and as a result the market is flat. That news isn’t all bad for farmers, but they will be debating the numbers in the report for some time to come.

“The world of corn is going to be debating acres and the debate will probably never end,” said Betsy Jensen, Northland Farm Business Management and a producer/marketer from Stephen, Minn., on July 8. “Farmers are going to read those headlines for months: How many corn acres were planted? How accurate was USDA?” 

This year, Jensen said, it appears the emphasis was put on intentions rather than actual planted acres.

“Normally it’s planted acres, but this year it was the intention, and farmers still intended to plant. I know a lot of (farmers) did not get the crop in the ground,” she said, “but the market is bearish because farmers did not give up, they still wanted the corn in the ground.

“It was a huge, huge bearish day, not good for anybody,” she said, adding that planted acreage was actually higher than a year ago at 91.7 million acres.

“Traders are thinking that number should have been more in the low 80s, but keep in mind that is what farmers were intending,” she continued. “They had good intentions when the survey was being done (in early June) and so there is a lot of doubt. This number is going to be debated for quite a while.

“No one believes it’s 91.7 (million), but it was bearish because it shows the determination of farmers and what they hoped to get done,” she continued. “Farmers were not walking away from this crop. They wanted to get it planted and this report indicated that farmers will bend over backwards to get the crop planted if Mother Nature allows it.”

The acreage numbers came as a surprise to most because they were expecting lower planted acreage given the many difficulties farmers faced this spring. The final planted acre number was just slightly less than the 92.79 million in the planting intentions report in March.

That said, Jensen said a bigger concern she wants farmers to take a step back and look at is demand which has been slower this year than last. In fact, at this point she said it doesn’t look like the U.S. is going to be meeting its old crop export sales estimate and could be as much as 200 million bushels short of meeting the export sales goals for last year.

“Looking ahead to the new crop, we are also way behind export sales compared to where we were a year ago,” she said. “These higher prices have put a halt to export sales.

“I just want (farmers) to keep that in mind too. We’re going to be debating acres for a long time and everyone is focused on that and how delayed the crop is, but we also have to be aware that demand is also starting to slow,” she added. “Prices have done their job and it has curbed some demand.”

However, the talk among farmers and traders is they still feel corn is going to be a bullish market this year because production is not expected to be as great. Jensen noted the current price situation for corn is unique. As of early July, December 2019 corn was between $4.40 and $4.60.

“We don’t have flat markets in corn very often. The corn market typically has a carrying charge and we usually have good supplies and it’s forward contracted into the future,” she said. “This year the market is flat and so if you’re looking at it from a cash flow perspective – if you need cash, need to pay your rent, need to pay your bills – corn is what you want to sell. I do believe that. And you can, if you want to, re-own it with some call options. A flat market is when you want to sell the corn with call options.”

Because planting was delayed over much of the Northern Plains and Midwest this spring, crop progress is another concern. On top of that, a recent weather report predicted an early frost which could be catastrophic to the corn crop which got a late start.

“I’m not so sure we can forecast in July for an early frost, but the rumors of the early frost forecast really kind of shook everybody up,” she said. “That’s something that we absolutely can’t afford to have because this crop is significantly delayed. We definitely need a late frost this year.”

Despite the difficulties with planting, the condition of the 2019 crop is pretty respectable given the way it went in the ground this year.

“It looks okay, although we’re below a year ago,” Jensen said, adding that emergence was still a concern into late June.

“The fact we are still talking about emergence when it comes to corn is ridiculous,” she said. “How has the crop not emerged this late into the season? Even as late as June 23, 20 percent of Indiana’s corn had still not emerged, so we have some issues.”

Compared to last year’s crop, which was “phenomenal,” this year’s crop is far behind. A year ago at this time 76 percent of the crop was rated good-to-excellent. This year only 56 percent is rated good-to-excellent.

There is a lot more in the “fair” category than a year ago, but overall it’s quite a bit worse than last year and it’s significantly delayed.

That’s one reason for the optimism of some farmers and traders, and if they still think corn is going to be bullish this may be a good time to make some sales, Jensen noted.

“I understand they’re nervous because we might have an early frost and the crop is behind schedule,” Jensen said, “but I think selling corn right now is going to be a good move. I know it’s scary, it’s nerve-wracking right now to be selling corn.

“Looking at cash prices we’re over $4. That does not happen,” she continued. “We were under $3 for a good chunk of the winter, and so I think this is a worthwhile market to reward. There’s talk of $5, $6 corn, but we have to take profits when they’re available.”

Jensen also noted that basis has been improving.

At one local elevator in west central Minnesota regularly followed in this column, corn prices were just under $4.12 cash and basis was 27 cents under as of July 8. December 2019 corn was $4.07 and basis was 36 cents under.