The March 31 USDA prospective plantings report indicated U.S. farmers planned to seed 91.1 million acres, which was far lower than the trade's 93.2 million estimate and the USDA's Ag Outlook forecast of 92 million acres and caused corn futures to finish limit up that day.
Recall right after the intentions report was released the trade felt farmers had sandbagged the USDA given the highest forward prices in years, and now in light of the above average planting pace for the 2021 U.S corn crop this spring, even more feel we could see big bump in this year's corn seedings when the new USDA acreage numbers are released next Wednesday.
This graphic reports the change in planted area for U.S. corn from the March intentions to the June acreage report in thousand acres on the left hand axis vs. the November soybean/December corn futures price ratio on April 1 and again on June 1 plotted on the right hand axis.
Also shown in the yellow boxes is the percent of the U.S. corn crop planted by May 20th each year from 1996 to 2021.
It is thought that corn acreage declines from the March prospective plantings to the June acreage report stem from two factors.
The first is weather, especially if it is bad, meaning usually cold and wet where it gets too late in the season for some farmers to continue to seed corn and instead switch to a crop that can be planted later which in the Midwest is very often soybeans.
Then there is changing economics, where either corn or soybean prices become more or less attractive on a relative basis or if possible, farmers can adjust their plantings based on this consideration.
Here we use the new crop soybean/corn ratio where 2.35 is considered the magic number.
A ratio over this implies greater soybean area while conversely a ratio less than 2.35 would imply increased corn acreage relative to soybeans.
This year 86% of the crop was planted as of May 20 which is slightly above the 78-80% long-term average suggesting maybe more acres planted and as opposed to both 2019 and 2020, there appears to be little prevented plantings this year.
The Dakotas, where this problem was severe the past two years and accounted for a good bit of the shocking 5 million acre drop in corn area from the 3/31 intentions to the 6/30 acreage report last year, saw rapid planting progress this spring as farmers were eager to seed corn after getting shut out the past two seasons.
As for economics, this year's SX/CZ ratio on April 1 was 2.61 which appears the highest level ever for that date and strongly in favor of soybeans though by June 1 it was down to 2.42 though still above the 2.33 average.
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