U.S. farmers expect to plant the greatest corn acreage since the 1930s, but prices and weather can have just as big an influence on whether intended plantings turn into actual acreage.
On March 28, the U.S. Department of Agriculture said farmers intend to plant 97.3 million acres of corn and 77.1 million acres of soybeans in its Prospective Plantings report. The corn figure is up slightly from 2012 and 6 percent over 2011. USDA said “if realized, this will represent the highest planted acreage in the United States since 1936 when an estimated 102 million acres were planted.”
Soybean estimated planted area is down slightly from 2012, but would be the fourth-highest on record, if realized. USDA said all wheat planted area for 2013 is estimated at 56.4 million acres, up 1 percent from 2012.
Grain industry analysts said the prospective plantings figures are mostly just a guidepost at this time and that the actual spring acreage will change. USDA will release final acreage figures on June 28.
Sterling Smith, a futures specialist in commodity research at Citibank Institutional Client Group, says price and weather are two of the major variables that can change farmers’ plans.
For this year, he said the market was affected in early April by the surprisingly higher-than-expected corn grain stocks report.
Corn stocks for the second quarter were much higher than anticipated, at 5.4 billion bushels. Second-quarter soybean stocks were 999 million and third-quarter wheat stocks were 1.23 billion bushels.
“The stocks number really affected the price of corn which infected the other markets…. There was weaker demand (for corn) and there were imports,” Smith said.
While the grain stocks report showed higher-than-expected corn stocks, farmers who plant the golden grain are likely to ignore that, said John Kleist, senior analyst at EbotTrading.com. “All we’ve done is talk about tight old-crop supplies,” Kleist says. “Farmers are less concerned about demand. Those who plant corn think it’s underpriced,” he adds.
Because he feels farmers favor corn, Kleist said wouldn’t be surprised if final corn acres rise by 500,000. Soybean acres will likely hold around current levels, he says.
“I could see corn picking up acres in the South from rice and other parts of the Midwest,” Kleist says.
Both corn and soybean prices dropped after the report, which moves the advantage back to corn, Kleist says. There was a time where farmers might have wanted to plant more soybeans, but with a lack of growing problems in South America and expectations of a record crop there, there’s less incentive for U.S. farmers to plant beans, he says.
Traders can get a sense of where the acreage battle is heading by looking at prices. During planting season, the industry watches the corn/soybean ratio, with 2.5:1 usually considered balanced. Shifts in the ratio can signal a market is trying to “buy” acres.
Mother Nature Has a Say Too
The cold and wet spring throughout much of the United States delayed planting for corn and soybeans in much of the country.
Darrel Good, agricultural economist at the University of Illinois, said prevented plantings can have a big impact on actual acreage. In 2012, this was less of an issue because of a warm spring, with only 1.24 million acres unplanted because of weather. But in 2009, 2010 and 2011, prevented plantings were high, at 4.18 million, 6.89 million, and 9.62 million acres, respectively, Good said.
This might be an issue in the northern Plains states because “snow cover suggests the potential for spring flooding” and delayed planting, he said.
Delayed planting can sometimes affect corn yield, Good said, adding that agronomic research suggests that corn planted after mid-May can have a large yield penalty.