Now that the reports have been released and the market has responded, the markets have turned their attention to spring planting.
“We’ve gotten past the Prospective Planting report. We’ve gotten past the monthly WASDE report. It’s all about planting now,” says Karl Setzer of Agrivisor.
The good news is that demand remains strong and so do prices, Setzer says. But he adds that many traders don’t seem to really trust the USDA’s Prospective Planting acreage numbers, and several theories are going around in the market.
The first theory is simply that USDA didn’t get a very good response to its survey, Setzer explains. Perhaps not enough farmers responded or perhaps they didn’t give a clear indication.
The second theory is that last year’s acreage totals were skewed by the federal COVID aid package because the payments were supposed to be for planted acres. As a result, Setzer says, some traders believe farmers planted acres simply so they could get a bigger payment through that Coronavirus Food Assistance Program (CFAP). That could mean that this year’s acreage figures are closer to what the market is demanding of farmers, and that last year’s numbers were the ones that were skewed.
Whatever the case may be, he says the market is looking for acres for both corn and soybeans, so there doesn’t appear to be any clear signal to plant one over the other. The soybean price is close to that 2.5:1 ratio (to corn prices) that is considered the norm.
There are some farmers who are talking about planting soybeans early, before corn, in an attempt to take advantage of an early harvest price incentive, Setzer says. That may not be possible in the northern Corn Belt, but it may happen in the south, where farmers are more likely to be able to harvest beans in late August.
And he says the increase in inputs such as nitrogen may end up being a factor in the corn vs. soybean planting decision.