Fundamentally Speaking

The survey period for the USDA's end of March prospective plantings report is now underway with the trade expecting a U.S. corn planted area figure close to UDSA's 94.0 million acre projection given late last month at their annual Ag Outlook Forum.

Crazy action in the grain and oilseeds markets since then with all the tariff news alongside the huge declines in the values of U.S. equities and dollar.

Still, even though the nearby May soybean/May corn price ratio has risen from a low of 2.05 to as high as 2.27 last week, the new crop November soybean/December corn ratio at 2.24 is not that far from its low of 2.20 seen the middle of last month.

This price ratio, along with prospective per acre returns, points to corn capturing back some planted area from soybeans for the coming year.

Of course, what farmers intend to seed and what actually gets put in the ground can change quite dramatically often due to weather conditions and relative price changes influenced by a variety of fundamental and technical factors.

Along these lines, this chart shows U.S. corn planted area changes from the February USDA Ag Outlook projection (AO) to the end of March planting intentions report and then to the June acreage report and then to the final figures given in January in 1000 acres on the left-hand axis.

Reported on the right-hand axis is the percentage change from the March prospective plantings report to the final figures given in the annual January production summary.

Last year's USDA Ag Outlook projection of 91.0 million acres proved too high with the March intentions coming in at 90.036 million acres.

In June however, USDA reported that farmers actually seeded 91.465 million acres which was 1.439 million, (1.6%) above the intentions figure.

Heavy rains in areas of the Upper Midwest in June however was one of the reasons why final planted acreage fell by 881,000 acres (down 1.0%) from the June Acreage report to the final production numbers in January.

As it turned out, the final planted area was actually up a mere 558,000 from what farmers had intended, a 0.6% increase which is the smallest differential between the March prospective plantings and final report figures since 2017.

Two years ago, the final corn planted area was 2.645 million acres above the March intentions (2.9% greater) which was the largest increase in both percentage and area terms since 2007.

This stands in contrast to bad weather years in 2019 and 2020 where final seeded corn area was respectively 3.3% and 6.5% below the March intentions.

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