While everyone spent the week waiting to see what the USDA would say in its June acreage report, analysts have been warning farmers the report will not be the last word on acreage.
In a year when planting was delayed and replanting was a common occurrence, there is no way the June report can pretend to be 100% accurate, says Don Roose, president of U.S. Commodities in West Des Moines, and that means the debate over acreage will join the one over yield as a continuing discussion.
“It’s going to be confusing,” he says.
It’s possible the USDA may hold a special survey in July to clarify the numbers, but whatever happens, this is going to a crop year in the United States that includes an awful lot of variables. The same is likely true of the marketing year.
Roose reminds farmers that the year began with huge world grain supplies and a raging trade war. Crop production from South America this past growing season was large, with an increase of more than 2 billion bushels from Brazil, Argentina and Ukraine.
That is unfortunate for U.S. farmers because what has happened with weather conditions so far this year in the United States has been historic — on par with the floods of 1993. Many acres have not been planted and many more were planted late and in poor conditions.
From a marketing perspective, all of this likely means that what could have been a huge weather market now will become a better market than had been anticipated — but still not necessarily a good one, Roose says.
He also says it probably will mean a tighter- than-normal basis and little carry in the market this fall. For farmers, it may mean this is a year to pay much closer attention to local cash prices than to futures prices on the Chicago Board of Trade because the opportunities are likely to be localized and temporary in many cases.
“This was the worst start in history for the U.S. crop,” Roose says.
The question now is what that really means at a time when supplies are plentiful in other parts of the world, the carryover is large, demand is down, and there is a trade war.