Analysis: Row Crop Planting Stabilizing

USDA’s March 31, 2009 Prospective Plantings Report didn’t show much change from last year — soybeans practically the same, corn down 1 percent. That, in of itself, is a change, say two Midwestern ag economists.

“The last two years, 2007 and 2008, we’ve just seen massive acreage shifts for corn and soybeans,” says Chris Hurt, Purdue Extension agricultural economist. “This report shows that we are starting to get back to an equilibrium or closer to a balance here in much of the Midwest.

“In Indiana we are about 50/50 corn and soybeans,” Hurt says. “That’s about where we were going into 2007 and 2008, so I think we are moving back towards a little bit more stability.”

Hurt and fellow agricultural economist Corinne Alexander presented their analysis of the report via a videoconference.

This year, corn producers intend to plant 85 million acres nationwide and if realized would still be the third largest acreage since 1949, behind 2007 and 2008. Hoosier corn producers intend to plant 5.7 million acres and Ohio corn growers intend to plant 3.3 million acres of corn, no change for either state from last year.

High fertilizer prices, high input costs for corn, and poor fall weather for Western Corn Belt states didn’t have much impact on growers’ decisions to take large acres of corn out of production, says Matt Roberts, Ohio State University Extension economist.

“The thing that is most striking is that all of the reasons that a lot of people were thinking that would drive a large reduction in corn acres really haven’t had a lot of impact,” Roberts says. “There are many areas in the U.S. that still favor corn profitability.”

Soybean producers across the United States intend to plant 76 million acres in 2009. If realized, the U.S. planted area would be the largest on record. Indiana soybean producers intend to plant 5.4 million acres. Ohio is one state where acreage is expected to increase by 100,000 acres or more with the intention to plant 4.6 million acres.

A year ago there was so much uncertainty and so many dramatic price changes going on,” Hurt says. “Much of the grain industry had to be very cautious on forward contracts or not even offer forward contracts for the new crop. We saw extremely wide basis levels, particularly as they were bidding for the new crop.

“Every indicator we have now is that we are returning to a much more normal grain marketing situation,” Hurt says. “There are aggressive bids for new crop. All of the grain industry is offering new crop bids at this point and at basis levels much closer to historical levels. After what we have been through — some of it pretty traumatic in not being able to offer contracts and extremely wide basis levels, it’s comforting to be returning to more of an equilibrium and more of a normal situation after some exciting times and some depressing times.”

Besides showing a return to some stability, Hurt says, the report shows prices have probably hit bottom.

“Corn supplies are going to be reasonably tight for the 2009 crop,” he says. “We knew input costs for corn were very high–particularly fertilizer prices, which, in many locations, struggled to come down as much as producers hoped they would. As a result, corn acreage will remain relatively low and give us fairly small carryouts in 2009 and on into 2010.”

Hurt believes this brightens our prospects overall for 2009 crop production and somewhat stronger corn prices — in the $4 per bushel range — and a boost for soybean prices — in the area of $9 per bushel range.

“Now harvest time prices, I think we will be talking around the higher $3 range — $3.75, $3.80 corn and that will vary depending on the location here in the Midwest,” Hurt says. “Going through the storage season in 2010, we have prospects of corn in the lower $4 range.”

Hurt says the bullishness lies on the soybean side of crop production, where planting intentions came in surprisingly low.

“This sets a tone,” Hurt says. “We already have very tight supplies, lower than expected stocks numbers, a smaller crop from Argentina and China buying record amounts of soybeans. When this is coupled with the low acreage of the new crop, it means $9 beans for the next year — maybe towards the higher $8 level at harvest, but then spanning into the low-to-mid $9 range with the possibility for $10 beans.”

Hurt believes soybean producers are past the worst of it and can feel more positive than earlier this winter.

“I think we can say the bottom is in and we’re past it, which is a good feeling,” he says. “I think we can feel pretty confident to look back and say, ‘Yes, those were the lows back this winter.’ Prices may not go straight up, but at least they are moving in a more positive direction than what we were seeing.”

One thing from the report that surprised Hurt was the overall number of acres that moved out of production. Hurt estimates that about 9 million fewer acres will be planted to crops this year, while Roberts estimates a reduction of 7 million acres for the principal crops.

“The big question is, where is all of that acreage going?” says Roberts.

Hurt explains that prices prior to 2006 were low and had been for quite some time. Then in 2007, grain prices multiplied and additional land was brought into production, which showed up in two ways, he says.

“One was double cropping — especially soybeans,” Hurt explains. “We think in 2007 and 2008 we added about 3 million acres of double-crop soybeans, but then there was about another 6 million acres nationally that could have been pasture or wooded land that got cleared and we added to our base. This year it appears we’ve taken out virtually all the additional land that came into production.”

Wheat is the one commodity that has relatively larger inventories and moderate prices, Hurt says. Nationally, all wheat planted is estimated at 58.6 million acres, down 7 percent from 2008. The USDA estimates Indiana wheat growers planted 470,000 acres of the national total, down 19 percent from last year, while Ohio growers planted 1 million acres, down 9 percent from last year.

The hope of some recovery in the United States and world economies by 2010 could be a further price-enhancing factor, Hurt says.

Leave a Reply

Crop Inputs Stories

FertilizerGypsum Added To List Of Conservation Practices
July 28, 2016
Crop farmers in a growing number of states may be eligible for financial assistance from the USDA’s Natural Resources Conservation Read More
Palmer pigweed seedhead in cotton
HerbicidesStudy: Fall Weed Controls Can Make Significant Impact On Glyphosate-Resistant Palmer Amaranth
July 28, 2016
An article published in the latest issue of the journal Weed Science shows that adopting harvest-time and post-harvest weed controls Read More
InsecticidesSyngenta: Beware Of Early Stinkbug Threat To Soybeans
July 28, 2016
With the record warm temperatures this past winter and confirmations from early entomologist reports, Syngenta encourages growers to monitor stinkbug Read More
Peanut field
Crop InputsVerdesian Introduces New Inoculant For Peanuts
July 28, 2016
As planning begins for the next growing season, Verdesian Life Sciences adds Primo Power CL, a new liquid inoculant, to Read More
Trending Articles
Southeast Farmers Coop - Finished Building
Retail FacilitiesNew Stueve Facilities Offer Ag Retailers Speed, Accuracy
July 9, 2016
Leading the industry in planning and constructing dry fertilizer storage and chemical warehouse solutions, Stueve Construction helped three ag retailers Read More
Heritage Cooperative
Retail FacilitiesKahler Automation Designs State-Of-The-Art Facility For Heritage Cooperative
July 4, 2016
Heritage Cooperative in Marysville, OH, needed an efficient liquid, dry and grain facility to serve the many needs of their Read More
The Andersons Waterloo
ManagementFirst Indiana Facility Certified Under 4R Nutrient Stewardship Certification Program
June 27, 2016
The 4R Nutrient Stewardship Certification Program has announced that The Andersons, Inc.’s Waterloo, IN, facility has been added to its Read More
Food IT
Industry NewsCalifornia Event Will Mix Ag And Tech Professionals To Explore IT Solutions
June 20, 2016
Silicon Valley is hot on agriculture, and an upcoming event in California will bring together the food and tech industries Read More
Monsanto Luling Plant
Eric SfiligojWhat’s Next For Monsanto?
May 31, 2016
For the folks at Monsanto’s headquarters in St. Louis, MO, it has been an eventful few weeks. Back on May Read More
Soybean Plant closeup
Industry NewsMonsanto Rejects Bayer Bid; Open To More Talks
May 25, 2016
Monsanto Co, the world’s largest seed company, turned down Bayer AG’s $62 billion acquisition bid as “incomplete and financially inadequate” Read More
Latest News
FertilizerGypsum Added To List Of Conservation Practices
July 28, 2016
Crop farmers in a growing number of states may be eligible for financial assistance from the USDA’s Natural Resources Conservation Read More
Management2016 CTIC Cover Crop Survey: 33% Report ROI From Cover …
July 28, 2016
Insight from 2,020 farmers from across the country reflected enthusiasm for cover crops and—for the fourth year in a row—found Read More
Palmer pigweed seedhead in cotton
HerbicidesStudy: Fall Weed Controls Can Make Significant Impact O…
July 28, 2016
An article published in the latest issue of the journal Weed Science shows that adopting harvest-time and post-harvest weed controls Read More
InsecticidesSyngenta: Beware Of Early Stinkbug Threat To Soybeans
July 28, 2016
With the record warm temperatures this past winter and confirmations from early entomologist reports, Syngenta encourages growers to monitor stinkbug Read More
Peanut field
Crop InputsVerdesian Introduces New Inoculant For Peanuts
July 28, 2016
As planning begins for the next growing season, Verdesian Life Sciences adds Primo Power CL, a new liquid inoculant, to Read More
Soil Young Corn
Crop InputsSmithsonian: 5 Things to Know About New GMO Labeling Bi…
July 27, 2016
On July 14, the House of Representatives passed a bill requiring large food companies to label products containing genetically modified Read More
Palmer pigweed in soybean stubble
HerbicidesSpecial Issue Of Weed Science Explores Human Aspects Of…
July 27, 2016
Weeds that evolve resistance to herbicides are a serious threat to global agricultural production. In this Special Issue of Weed Science, Read More
CHS Primeland
CropLife 100CHS Businesses In Washington, Idaho Combining For Great…
July 27, 2016
As full-service ag retailers, CHS Primeland and CHS Farmers Co-op collectively serve farmers and other customers in 15 counties in Read More
Storage Tanks at Nachurs
Crop InputsNACHURS Joins Field to Market
July 27, 2016
NACHURS announced today that it has joined Field to Market: The Alliance for Sustainable Agriculture, a leading multi-stakeholder initiative working Read More
Illinois Researchers
FertilizerMeasure Of Age In Soil Nitrogen Could Help Precision Ag…
July 26, 2016
What’s good for crops is not always good for the environment. Nitrogen, a key nutrient for plants, can cause problems Read More
Kochia
Crop InputsNufarm Launches New Herbicide for Resistant Kochia
July 25, 2016
Nufarm introduces Scorch herbicide for U.S. farmers and ranchers combating a broad range of troublesome broadleaf weeds. A unique premix Read More
ManagementNew Rabobank Report Calls for Farmer ROI Focus
July 25, 2016
As U.S. row crop farmers brace themselves for a third year of negative margins, Rabobank believes farmers must lower the Read More
Syngenta Sign
Crop InputsBloomberg: Syngenta-Chem China Deal on Track for Regula…
July 25, 2016
Syngenta AG, which has agreed to be taken over by China National Chemical Corp. for $43 billion, said talks with Read More
ManagementGROWMARK Meeting Visit, Company Takeover Updates, and R…
July 22, 2016
Editors Paul Schrimpf and Eric Sfiligoj discuss their recent speaking engagement at GROWMARK’s eastern event, crop protection company merger rumors, Read More
Crop InputsMonsanto: EU Approves Roundup Ready 2 Xtend Imports
July 22, 2016
Monsanto Co. announced today that the European Commission has granted import approval for Roundup Ready 2 Xtend soybeans. This milestone Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsSyngenta Announces Alfalfa Seed Split Off
July 22, 2016
On September 1, 2016, Syngenta will transfer sales and distribution of alfalfa seed to the NEXGROW branded business that is Read More
Dow DuPont
Crop InputsDuPont, Dow Shareholders Approve Merger
July 21, 2016
DuPont and The Dow Chemical Company announced that, at their respective special meetings of stockholders held today, stockholders of both Read More
ManagementLand O’Lakes Announces SUSTAIN Business Unit, Oth…
July 20, 2016
Land O’Lakes, Inc. today announced the formal organization of a new business unit, SUSTAIN, and its leadership. SUSTAIN will focus Read More