Fundamentally Speaking

For the second year in a row, USDA delivered some shocking planted area figures in its June Acreage report.

Recall last year USDA showed corn plantings at 91.7 million acres, just a 1.092 million acre decline from the March intentions figure and well above trade expectations even with the slowest planting pace on record causing futures to drop limit down that day.

Meanwhile the June 2019 acreage report showed soybean seedings off 4.577 million acres from the March Prospective Plantings report, the largest March to June planted area decline for soybeans ever.

This year the opposite happened as USDA reported in the June acreage report 2020 corn seedings at 92.006 million acres, a stunning 5 million acre drop from the March intentions, by far the largest March to June decline ever and well below the average trade estimate for a mere 1.80 million acre decline.

For the second year in a row, there is a lot of head scratching after the report.

Without a doubt, the huge move in the SX2019/CZ 2019 ratio from 2.39 on April 5, 2019 to 1.98 on June 11, 2019 kept farmers seeding corn well past what the calendar said made sense.

Similarly, this year's move in the SX2020/CZ 2020 ratio from 2.30 on March 16 to 2.55 or thereabouts from mid-March through all of April and May could have enticed more farmers to switch from corn to beans than had been thought.

Certainly complicating the situation is the fuller acreage numbers that show corn, soybean, all wheat and cotton acreage, the four biggest crops in terms of area planted grown in the U.S. at 232.3 million acres, off a huge 6.60 million acres just from the March intentions report, begging the question of where all this land went.

Perhaps some of this will be found in later production reports.

Along these lines, this graphic shows the USDA acreage changes for U.S. corn and soybeans from the March intentions to June acreage report and then from that point to the final production report figures.

Last year's record late plantings for both corn and soybeans resulted in further acreage declines for both crops with final 2019 corn planted area at 89.7 million acres, another 2.0 million acre drop from June while final soybean seedings last year were another huge 3.94 million acres even below the June number.

This year both corn and soybeans were seeded at an above average pace, so maybe planted area figures will increase in subsequent production reports as has been seen in the past.

Still it could be that the pandemic has had a greater impact on farm finances and producers outlook for the future than had been considered.

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