The stars for Friday's USDA reports were clearly the Planting Intentions for 2019 corn and soybeans, with large corn stocks (as of March 1) getting the award for best supporting actor in a bear costume. USDA showed intentions for 92.792 million acres (ma) of corn in 2019, with soybeans at 84.617 ma. The former was up 3.66 ma from last year, while soybeans were down 4.579 ma. Traders, analysts and even random guys at coffee shops were expecting some shift to soybeans and corn, but the degree of shifting caught some by surprise. I'll also argue that the data showed a big implied increase in unplanted acres. Let's deal with that one first.
The top table shows what USDA calls Principal Crop Acres for 2019 based on the Planting Intentions report. Please note, that hay is only shown by USDA as a harvested number, and there was no number for rye, so I used a plug number. I combined several types of edible beans on one line, and caught things like potatoes in the Miscellaneous category.
Note that primary crops totaled 315.352 ma, which is 4.226 ma below last year. Either folks were sandbagging in the surveys or they were literally sandbagging and expecting that nothing would be planted in their fields this year.
A small part of the difference may be double-crop soybean intentions, which create acres out of thin air and subtract them the same way. With lower winter wheat plantings and lower soy prices you tend to get fewer double-crop beans. That said, prevented planting "plans" or "suspicions" likely account for much of the shortfall.
If we plug in 5.5 million prevented planting (PP) acres, our bottom line total for planted, CRP and PP is within 617,000 ma of last year and 2 ma plus from 2017. Is 5.5 ma realistic?
My second table shows only 1.9 ma were prevented in 2018, but 6.6 ma were on the sidelines in 2015 and 8.3 ma in 2013. There is a price to pay for claiming prevented planting. The check you get isn't large compared to what you can make on a good crop, and claims in any kind of insurance tend to raise future premiums. You do it because you have to. If it stays wet, the 5.5 ma for PP could be conservative.
Now back to the corn and soybeans. The main questions I got following the acreage report went something like this, "Isn't that corn number too high? Isn't it likely to shrink due to prevented planting or switching to soybeans?"
Perhaps a little, but not a lot.
Here are my reasons:
1. The survey was focused on the first 10 days of March, but data was taken up to March 19. If you were in the Western Corn Belt, that period was about as bleak as it gets. You were already being flooded, or you were staring at 20 inches or more of snow that had been there seemingly forever. You weren't likely to overstate your corn intentions. The soy-to-corn ratio says to grow more corn. Anything below 2.3:1, which we had last fall, says to grow a lot more corn. Ratios below 2.5:1 still suggest a little creep toward corn and away from beans. The market has spent much of 2019 in the 2.3 to 2.4 range.
2. A peek at corn planting intentions by state versus a year ago shows higher planned acreage for the entire Corn Belt (except Missouri and Ohio) and also in the Southeast and the Northern Plains. Those with more favorable moisture profiles are also planning to plant more corn. Therefore, Friday's numbers were fundamentally bearish for corn, but probably not as much as the price movement would have you believe. The low acreage for soybeans wasn't particularly supportive, because cutting 4.579 ma at 50 bushels per acre only cuts 229 ma from the total supply. Current old-crop ending stocks are expected to be 900 ma. There is plenty of fat there. Yes, a China purchase deal could change that fairly quickly, but the deal isn't signed yet. As my grandma always said, don't count your chickens before they're hatched.
Alan Brugler may be reached at firstname.lastname@example.org
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