The USDA will release its Prospective Plantings report this Thursday and trade expectations are that farmers will seed about 90 million acres of corn, two million higher than last year.
Though total production costs are below projected revenues on a per acre basis, they are at least above variable costs.
Of course Mother Nature and the relative change in crop prices during the spring will have a say in whether final plantings fall below or above the March intentions.
The accompanying chart shows the change in U.S. corn acreage from the March intentions to final plantings vs. the percent of the crop planted by May 5th.
Also reported is the November soybean/December corn futures ratio as of May 1st.
As one would suspect, the later plantings proceed, the more likely that actual seeded acreage will recede from intentions.
This is based on the realization that later plantings can harm yields by having the crop pollinate in late as opposed to early July when temperatures are hotter, perhaps impeding the pollination process, while a later planted corn crop is also more vulnerable to a first fall freeze.
Producers can opt for a shorter season variety but they are often lower yielding.
The 20 year average for the percent of U.S. corn planted by May 5th is 50%, so we can see why in years where the planting progress is lagging by this date such as in 2013 or 2014 why final corn planted acreage is well below what was intended.
Last year however seedings were rather quick with 61% in the ground by May 5th, yet final corn acreage was 1.20 million below the March prospective plantings figure.
Either the last 39% went into the ground very slow or a relatively more buoyant soybean price as compared to corn as indicated by a high SX/CZ ratio of 2.45 may have prompted some farmers on the fence to seed more soybeans.
This appears to be the case in 1997, another year where half the crop got the ground rather quickly but final corn plantings were well below what had been intended.
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