USDA released their annual Prospective Plantings Report on Friday, March 29, and its ‘snapshot’ into farmer’s planting intentions has already led to a negative response in the corn market. U.S. corn planted acreage is expected to be up four percent from 2018.
“We got a bigger shift in corn acreage than we had expected,” said Frayne Olson, NDSU Extension crops economist and marketing specialist.
Prior to the release of the report, the expectation among analysts was to see a decrease in soybeans and a slight increase in corn, however, the report revealed a bigger shift in acreage than expected.
“These are not numbers USDA made up,” Olson said. “These are numbers that are based off survey results. They surveyed 82,352 farmers on what they intend to plant in 2019. This is a very broad base because statistically they try to cover all the major states to make sure they have a large enough sample to draw conclusions from.”
The average estimate prior to the report for corn was 91.3 million acres, and USDA came in at 92.8 million acres – a substantial increase. Soybean numbers came in more neutral to slightly positive from a market perspective, with an estimate of 86.2 million acres prior to the report and 84.6 million acres after.
“Those are the two big numbers everyone looks for,” Olson said. “We were expecting some decrease in beans and an increase in corn, but the shift was much bigger than the market had expected – negative for corn and slightly positive for soybeans.”
Record corn acreage in N.D.
While corn acreage has jumped nationwide, North Dakota in particular is expected to see a massive jump – a 29 percent increase from 2018 at an estimated 4.05 million acres, a record high for the state.
What’s contributing to this jump? Olson says there are a couple factors: corn prices have been holding up on the futures side as well as on the local side, and soybean prices have been hit hard by trade and tariff issues, as well as by a very large crop last year.
“On the corn side, the ending stock numbers based on USDA forecasts are supposed to come down and the demand base for corn has been robust,” he said. “We’ve had our issues on the ethanol side. The ethanol numbers have not been as strong as we were hoping, but the feed numbers are good, the export numbers have been very good, and locally, corn prices for both the old and new corn crop have been okay. It’s not as large as farmers want, but they’re okay.”
North Dakota had very good corn yields last year. Farmers couldn’t pencil in a big profit margin, but if they got in early with good yields, they were able to make some money on corn a year ago. Fast forward to 2019, Olson says some farmers are looking backwards thinking they can do it again, leading to greater acreage numbers.
“Of corn, soybean and spring wheat, corn looked like it had some upside potential,” he said. “Obviously, now with the drop in prices, the market is signaling, ‘whoa, wait a minute guys.’ The corn market can handle some extra acreage, but this is more than necessary. If we have trend line yields nationally with this projected acreage, we’re going to have a lot of corn left over.”
With the annual Prospective Plantings report causing a negative response in the corn market, is it possible farmers reverse course and plant less corn than expected?
“Yeah, it’s possible,” Olson said. “The big question the market is asking now with this corn/soybean acre blend, especially further south in Nebraska, South Dakota and Iowa with flooding and wet conditions, what kind of planting season are they going to have? Those areas as well as Kansas, Missouri, Illinois, Wisconsin and southern Minnesota had a wet fall, wet winter and not only snow, but rain. There is concern about very wet conditions for spring work throughout the western Corn Belt. The surveys for the report were conducted in early March, before all the flooding and poor conditions came up.”
For North Dakota farmers, Olson believes their acreage decisions depend on where they are in the state.
“If you’re in eastern North Dakota, it’s been a cool spring with wetter conditions and more snowpack. The calendar is working against us a bit too. We need some warm weather to warm the soil up,” he said. “In the central and western parts of the state there’s been less snowpack, but drier conditions in the fall, so they’re looking at the snow as a benefit to provide some spring moisture to get the crop out of the ground and start planting as soon as the soil warms up. I expect we’ll see some diversity in the state on acreage shifts.”