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

Young corn plants in soil
Crop InputsFortenza Insecticide Seed Treatment Receives EPA Registration
May 25, 2017
Fortenza seed treatment insecticide from Syngenta has received registration approval from the U.S. EPA for use on corn and cotton Read More
Photo credit: The United Soybean Board/The Soybean Checkoff.
Seed/BiotechKansas State University Researchers Find New Pathogens in Soybean Seeds
May 24, 2017
A single seed seems so simple. Put it in the ground, give it some care, and you’ve soon grown food. Read More
Soybean Field
HerbicidesNew Dicamba Herbicide Premix Coming Soon from Syngenta
May 24, 2017
Syngenta has announced the name of its new herbicide featuring the active ingredients of S-metolachlor and dicamba. Upon registration by Read More
FungicidesSyngenta Launches New Seed Treatment Fungicide
May 22, 2017
Syngenta has announced the launch of PLENARIS seed treatment fungicide for the control of downy mildew in sunflower. PLENARIS contains Read More
Trending Articles
Migrant farm workers
LegislationTrump: Immigration Crackdown Won’t Impact U.S. Agriculture
May 16, 2017
President Donald Trump said he would seek to keep his tough immigration enforcement policies from harming the U.S. farm industry Read More
AGCO Ratliff featured
Eric SfiligojRemembering Robert Ratliff
May 15, 2017
With all the fast-paced happenings in agriculture this spring, with multiple mergers in the works and planting season in full Read More
Case sprayer nozzle closeup
EquipmentSpray Application: A Nozzle Renaissance
May 2, 2017
If you had asked four-decade ag veteran Mark Bartel, President of Wilger Inc., just a few years ago what lay Read More
ManagementWashington Update, Dow-DuPont Earnings, and the Passing of an AGCO Legend
April 27, 2017
Editors Paul Schrimpf and Eric Sfiligoj talk about the latest Beltway news, crop protection company 1st quarter numbers, and the Read More
Crop InputsFlying Under the Radar No More, FMC Goes Big
April 13, 2017
Describing FMC as “under the radar,” admittedly, is probably a stretch. But in a snap of the fingers, FMC upped Read More
Young Corn Plants
Crop NutritionStill Hunting Yields
April 1, 2017
There’s no denying it — the agricultural marketplace today is undergoing a fundamental shift in fortunes. Not too many years Read More
Latest News
ManagementTrip Report, PSM R.I.P, and Ag’s Reaction to Federal Bu…
May 25, 2017
Editors Paul Schrimpf and Eric Sfiligoj talk about their recent travels, the end for Process Safety Management (PSM), and how Read More
Corn soil
LegislationARA Member Testifies Before Senate Ag Committee
May 25, 2017
Agricultural retailers stand on the front-lines of the American economy. As trusted advisors to America’s farmers, ag retailers are uniquely Read More
Young corn plants in soil
Crop InputsFortenza Insecticide Seed Treatment Receives EPA Regist…
May 25, 2017
Fortenza seed treatment insecticide from Syngenta has received registration approval from the U.S. EPA for use on corn and cotton Read More
ManagementFarm Market iD’s Agriculture Database Now Covers More T…
May 25, 2017
Farm Market iD, farmmarketid.com, has announced the release of its 2017 Annual Update of its farm and land database. The Read More
Food IT Fork-to-Farm
Precision AgThe Mixing Bowl Event Connects Technology, Food, and Ag…
May 24, 2017
For the fourth consecutive year, The Mixing Bowl presents FOOD IT, under the theme “Fork to Farm.” Action-oriented entrepreneurs, industry Read More
Photo credit: The United Soybean Board/The Soybean Checkoff.
Seed/BiotechKansas State University Researchers Find New Pathogens …
May 24, 2017
A single seed seems so simple. Put it in the ground, give it some care, and you’ve soon grown food. Read More
Soybean Field
HerbicidesNew Dicamba Herbicide Premix Coming Soon from Syngenta
May 24, 2017
Syngenta has announced the name of its new herbicide featuring the active ingredients of S-metolachlor and dicamba. Upon registration by Read More
Eric SfiligojMonsanto ‘Picks Its Battles’ by Nixing Deere Deal
May 23, 2017
Having been in the trade journalism game since the mid-1980s, I remember several watershed moments during my career. One of Read More
FungicidesSyngenta Launches New Seed Treatment Fungicide
May 22, 2017
Syngenta has announced the launch of PLENARIS seed treatment fungicide for the control of downy mildew in sunflower. PLENARIS contains Read More
Corn close up
Crop InputsMonsanto’s First HPPD Herbicide Garners EPA Appro…
May 19, 2017
Monsanto announced today that EPA has federally approved Harness MAX Herbicide, the first herbicide in the Monsanto portfolio to provide Read More
ManagementPrecision Planting Deal, China Developments, and Enviro…
May 18, 2017
Editors Eric Sfiligoj and Dan Jacobs discuss the latest news on John Deere’s now dead deal for Precision Planting, China’s Read More
Soybean aphid leaf
InsecticidesMulti-state Research Reveals IPM Best Option for Treatm…
May 17, 2017
About 89.5 million acres of soybeans will be planted across the U.S. in 2017 — a record high, according to Read More
GROWMARK-2017-Interns
CropLife 100GROWMARK Names 2017 Summer Interns
May 16, 2017
Forty-two college students are exploring agricultural career opportunities this summer as GROWMARK interns. They are working at FS member cooperatives Read More
Migrant farm workers
LegislationTrump: Immigration Crackdown Won’t Impact U.S. Ag…
May 16, 2017
President Donald Trump said he would seek to keep his tough immigration enforcement policies from harming the U.S. farm industry Read More
Flooded corn in Indiana
FertilizerBoth Wet and Dry Conditions Threaten Nitrogen Loss
May 15, 2017
The weather is notoriously unpredictable, leading to challenges for planting, harvesting and applying the nitrogen (N) your corn crop needs. Read More
farmer Kip Tom
Precision AgAg Tech: On the Cusp of Something Big?
May 15, 2017
The investment and ag-tech sectors’ continuing courtship of agriculture, smoldering for three or four years now, was well in evidence at Read More
AGCO Ratliff featured
Eric SfiligojRemembering Robert Ratliff
May 15, 2017
With all the fast-paced happenings in agriculture this spring, with multiple mergers in the works and planting season in full Read More
Greg Musson, Gar Tootelian
ManagementOpinion: Shaking Your Perspective in Ag Retail
May 12, 2017
Some of you I’m sure have encountered our recently retired salesman extraordinaire, Dan Bellanger. He worked in the industry for Read More