Late March is typically a time when acreage talk and projections dominate the markets. However, 2020 is anything but typical. As USDA prepares to release its March Planting Intentions report on Tuesday, Chinese demand and COVID-19 are still consuming the markets.
“Typically, there would be strong attention on the upcoming Prospective Plantings Report on March 31,” says Brian Grete, Editor of Pro Farmer. “With all the COVID-19 concerns and impacts that’s having economically and to global supply chains–along with the major ethanol sector struggles–traders’ focus hasn’t shifted to potential acreage for this year–at least not on a broad scale.”
Grete says traders will use USDA’s March 31 planting intentions estimates as a benchmark for acreage this year, but he thinks markets need to return to more normalcy before attention to acreage and potential crop size heightens.
Possible Acreage Shift
USDA says it still plans to release its Planting Intentions report as scheduled, a report that could reflect changes in producers’ mindsets.
“I do think there's a potential for some producers to change those marginal acres as they're watching what is happening in the ethanol market and what might be happening if the Chinese come into the market and make some buys,” says Seth Meyer, economist with the University of Missouri. “I do think there's some chances for some producers to shift around there, but the demand side is so dominating at the moment that I think that's where folks are focused.”
The focus is shifting, as various dynamics continue to explode the markets. From major price drops to questions about fertilizer supplies and the supply chain this spring, While planting decisions may still change, Pro Farmer’s initial survey was in line with USDA’s initial look at acreage.
“Our Pro Farmer survey from the beginning of March indicated farmers intend to plant 94.2 million acres to corn,” adds Grete. “Nothing that’s happened in the corn market the past three weeks would suggest corn planting intentions have increased. In fact, they are probably decreasing some. With that said, U.S. farmers favor planting corn – if conditions like weather, economics, etc., allow – so corn acres aren’t likely to drop much from original planting intentions. Soybeans have likely picked up some acres over the past several weeks. The cotton market is trying to tell farmers not to plant what they intended.”
“I believe that the prospect of a large corn acreage number is an overall negative factor,” says Joe Vaclavik of Standard Grain. “Still, the market has already discounted big corn acreage in all likelihood. If there were to be a surprise, it may be in the stocks numbers. The stocks numbers tend to sit on the back burner ahead of these reports, but can often be the bigger shock to the trade.”
Possible Acreage Mix
While stocks could be the bigger shock, much of the focus leading into the reports is acreage. During its Ag Outlook Forum February, USDA predicted 94 million acres of corn to be planted in 2020, which is up 4.3 million acres from 2019,
“I believe that corn acreage will be somewhere in the 93 to 95 million acre range next week,” adds Vaclavik. “Neither new crop corn or soybeans are profitable at current levels for most operations. That being said, we could see some ‘after the fact’ switching in regard to acreage.”
No matter what farmers plan to plant, there’s one factor that could have the ultimate say: weather.
“Weather will always have its say, just like it did last year,” says Meyer. “I think a shift in the corn acreage is a natural path now. Now, will we be closer to 92 million acres to 93 million acres? Some folks are at 94 million, and I've heard numbers higher than that, but I think any of those are realistic as at where we're at with prices today. And again, as we saw last year, weather is going to have the final say, at the end of the day.”
All About the Weather
Weather looks less than ideal across much of the country right now. Wet weather continues to sweep the Corn Belt, adding concern to already saturated soils.
“It's still going to rain, and there are still going to be some delays, but it's not going to be as widespread and serious as it was last year,” says Drew Lerner of World Weather, Inc.
Lerner thinks weather for planting this year won’t be as devastating as last spring.
“I do think we're going to see more breaks than we saw last year,” adds Lerner. “I think the volume of precipitation that we get is going to be less than last year. As we progress deeper into the spring and summer, we're going to actually see a decline in the amount of precipitation. I'm still expecting the summer to turn a little dryer, so contrary to the National Weather Service, that's where I'm going.”
Watch Drew Lerner's spring outlook below.