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High acreage numbers don’t scare crop markets

High acreage numbers don’t scare crop markets

IL Corn and Soybean field

Prices are high, and the USDA expects farmers to try to take advantage in 2021.

At the Ag Outlook Forum Feb. 18-19, the USDA released expected acreage totals for the upcoming growing season, with both corn and soybeans predicted to be above 90 million acres. Corn was estimated to see 92 million acres planted, while soybeans were pegged at 90 million acres.

While that may appear bearish on the surface, Mike Zuzolo said with tight supplies around the country, it hasn’t hit markets too hard.

“Coming in at 90 million acres, that’s about 7 million more than last year, so it’s a big jump,” Mike Zuzolo said. “Using all of USDA’s demand numbers from the current year and the stocks ending number of 120 million bushels, using a 51.5 bushel national yield, we still won’t add anything to the carryover. The market sees that as tight and that’s why November new crop is firmer.”

Zuzolo said there are reports the U.S. may import soybeans due to the significantly low supply.

“It leaves open the idea that we are probably down around the 100 million bushel carryover amount for soybeans, if not a little less,” he said.

For corn, at 92 million acres estimated, Zuzolo said numbers weren’t surprising overall. The major factors that are going to move the corn market going forward are export demand and ethanol. As prices are rising for corn, he said determining whether to sell or store old crop depends on location.

“I think it’s really important to watch geographically,” Zuzolo said. “Ethanol plants this week, because of the energy issues in Texas, literally were shutting down and selling natural gas. We are seeing higher unleaded gas prices, which keeps ethanol cheaper but keeps consumption level lower.”

He said gasoline consumption is not expected to rise back to pre-COVID-19 levels quickly, either, which will greatly impacts ethanol demand.

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