While the price charts have been bearish for corn for quite a while -- double top on the weekly; head and shoulders on the December daily -- a lot of folks were blaming that weakness on poor export demand and a lack of solid information regarding U.S. supplies. Surely, the cavalry would arrive on Aug. 12, flying their bull flag with the prevented planting (PP) logo on it!
That isn't exactly what happened. USDA did show smaller planted acres on Monday, at 90.005 million acres (ma). That was down from 91.7 ma in the July WASDE report and the June 28 Planted Acreage report. It was just a lot larger than the average trade estimate of 87.9 ma. While the production puzzle still has several pieces missing (dry pockets, early or even normal frost risk, lots of drowned out spots and compaction), they fall in the yield part of the picture. We can now put together the edge of the puzzle and finish the acreage section.
TOTAL PLANTING INTENTIONS
USDA reports principal crop acres in the June Planted Acreage report. We have updated them with Monday's acreage figures. You will note that primary crops in 2019 total 304.625 ma versus 319 ma in each of the past two years. In the March Planting Intentions report, Primary Crops were already down about 4.4 ma from each of the two previous years.
Data collection for the March report was "as of March 1," but data was being accepted until March 18. Thus, producers who were flooded out in the March "bomb cyclone" and levee breaks on the Missouri and other rivers already knew they are were going to have a problem. We have contended that the March number included 4.4 ma of potential PP, and thus the total intended acres from which to deduct PP might have actually been 4.4 ma higher and fit better with the two previous seasons. Corn intentions in March were 92.792 ma, but could have been as high as 96 ma if most of the implied PP was corn ground.
FSA PREVENTED PLANTING
Farm Service Agency prevented planting claims had been rumored to be 15 ma to 20 ma across all crops, more than double the record 9.29 ma from the 2011 flood year. That proved accurate, with the August number at 19.259 ma. Keep in mind that this is on a principal crops acreage base of more than 324 ma.
|August Total Prevented Planting Acres|
Traders had reasons to expect more than half of the PP acres would be corn, including the attractive crop revenue insurance price for corn versus soybeans. Again, that was accurate, with the August report showing 11.210 ma out of 19.259 ma coming from corn. One logical error was in deducting the 11 ma or something close to it (not known until Aug. 13) from the March intentions of 92.792 ma rather than a higher number if all acreage had been accounted for in March. Please note also that FSA planted acres and PP acres continue to grow until the final report in January. Reporting is never complete in August. National Agricultural Statistics Service (NASS) included this as a reminder in the intro to the Crop Report, along with a reminder that NASS acreage is always larger than FSA acreage, because there are farmers out there who have never participated in farm programs and thus do not report acreage. We have noted that in recent years, PP acreage will typically increase in the September and subsequent reports, as will planted acreage.
The new crop soy:corn ratio is a rough measure of the attraction of planting soybeans versus corn. While few producers actually use the ratio itself in their decision process, their collective acreage actions tend to reflect the ratio. Historically, ratios below 2.4:1 have seen some acreage switches from soy to corn, with the movement much more aggressive below 2.2:1. The ratio dropped below 2.2:1 in mid-May, as soon as the corn rally started, and dropped all the way down to 1.98:1 in June. The market was telling producers in no uncertain terms to plant corn instead of beans if at all possible. Based on Monday's NASS re-survey data, it appears likely that producers outside the worst affected counties increased their corn acreage after being given this price signal. In other words, they might have been planning 96 ma and bumped it to 100 ma (before PP claims) due to the rally to five-year high prices. Taking 100 million corn acres and deducting 11 ma for prevented planting gets you pretty close to the NASS 90 ma.
Here's where it gets a little tricky. U.S. corn production is acreage harvested for grain times average yield per acre. Acreage planted to corn as a cover crop, or intended for silage, will look like corn standing in the field but won't contribute to final corn production. Livestock feeders need silage, and can if necessary, harvest it less than mature. They likely planted a lot of the later corn in June knowing yield potential and frost risk were part of the equation. NASS is looking at a higher silage/abandonment component this year, with 91.1% of the planted acres shown as harvested for grain. That would be the lowest grain portion (or highest silage/abandonment) since the 2012 drought. They are pulling their punches, however. In the 1993 flood year, only 85.9% of the crop was harvested for grain. That was a final number but NASS isn't anywhere close to that yet.
Cover crops and acreage planted solely to qualify for MFP payments are somewhere in this data. USDA made it known early on that producers would not qualify for MFP payments unless something was planted on the ground. With MFP payments of up to $150 per acre (and estimated around $70 at planting time) there was an additional incentive to throw some seed out there even if not done in the most professional manner. Cover crops are required on prevented planting ground, and corn is an eligible cover crop even if it won't reach maturity. It is eligible for harvesting as silage after Sept. 1, and that would also be attractive to livestock producers.
I've only addressed acreage in this article; yield is the other major piece. At 82 million harvested acres, a 1 bushel-per-acre (bpa) change in yield moves production 82 million bushels (mb). At a 169 bpa yield, a 1 ma drop in harvested acreage drops production 169 mb. Thus, about 2 bushels on the average corn yield this year has about the same impact as 1 million harvested acres.
Alan Brugler may be contacted at firstname.lastname@example.org
© Copyright 2019 DTN/The Progressive Farmer. All rights reserved.