Fundamentally Speaking

Quick Start to Planting Season Unlikely to Boost Acreage

Joel Karlin
By  Joel Karlin , DTN Contributing Analyst

Wow. What can you say when trading in mid-April is usually a staid affair as U.S. crops are just starting to get in the ground and the market is assessing what the final output would be of South American row crops.

Not this year as the rocket ship known as grain and oilseed price action is seemingly moving into even higher gear if that is possible as now all wheat, soybeans, soybean oil and corn contracts are at new highs and it looks like soybean meal will soon get there.

Beans are now over $15.40 and with corn at $6.50 is appears that unless final planting figures jump substantially from the March 31 Prospective Planting figures and yields are record high, prices will remain at elevated levels for much of the year.

If Mother Nature does not cooperate, all-time highs for both corn and soybeans, which were $8.24 and $17.39 respectively at height of 2012 drought, cannot be ruled out.

This graphic shows the change in U.S. corn and soybean acreage from the March 31 planting intentions report to the June 30 acreage report in 1000 acres on the left hand axis vs. the percent of corn planted by May 5 and the percent of soybeans planted by May 20 on the right hand axis.

Also included in the yellow circles is that year's November soybean/December corn price ratio around April 22nd.

In a prior post we noted that it is rare for corn or bean acres to increase by more than 2 million from March to June and is unprecedented for both to happen which is needed this year.

A cold but dry beginning to 2021 U.S. growing season that has delayed both planting and germination rates is far from ideal and not the quick start that many envisioned.

A look at years of large increases in corn area from 3/31 to 6/30 show 2000 with planting progress that year at 70% by May 5, well above the 48% average, 2004 with 61%, 2007 with the biggest 3/31 to 6/30 increase of 2.434 mln acres yet planting progress that year was just average at 49% though the SX2007/CZ2007 ration on 4/22/07 was a low 2.08 and in 2009 when May 5 corn plantings were very delayed at only 37%.

As for soybeans, large jumps were seen in 1997 when bean plantings by May 20 were 53%, above the 44% average and in 2009 when plantings like corn were very slow at just 35%, 2012 when plantings proceeded at the quickest pace ever at 76% in the ground by May 5th and in 2016 when the SX/CZ ratio at 2.58 was well in favor of soybeans.

To be truthful the correlations between the change from March to June acreage and dates planted is not that high with a better relation between acreage shifts and the November soybean-December corn ratio as of April 22nd.

As of right now, it appears that the odds of the 2021 U.S. soybean area increasing above the 3/31 intentions figure of 87.6 million acres seems more difficult to envision as corn seedings so far this month have at best been average while the rapid two week plunge in the SX2021/CZ2021 ratio from 2.62 to 2.41 in just two weeks also works against any late corn to soybean switching ideas.

As an aisde, it's interesting to note the trend toward less corn in ground by May 5 yet the amount of soybeans seeded by May 20 has trended higher.


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