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.

(If you missed our original article on the USDA Prospective Plantings Report, click here.)

“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, which is archived at http://www.agecon.purdue.edu/extension/programs/outlook_connect.asp.

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

Featured Stories

Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More
CropLife 100Pinnacle Acquires Kansas-Based Cedar Ridge Supply
September 16, 2014
Cedar Ridge Supply will operate as part of Pinnacle's Performance Agriculture brand. Read More
CropLife 100CHS To Build $3 Billion Fertilizer Plant In North Dakota
September 5, 2014
The fertilizer plant in Spiritwood will be the single largest investment in CHS history, as well as the single largest private investment project ever undertaken in North Dakota. Read More
CropLife 100Pinnacle Acquires East Kansas Chemical
September 2, 2014
Ranked 82nd on the CropLife 100, East Kansas Chemical will operate as part of Pinnacle's Performance Agriculture brand. Read More

Trending Articles

FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
CropLife 100CHS To Build $3 Billion Fertilizer Plant In North Dakota
September 5, 2014
The fertilizer plant in Spiritwood will be the single largest investment in CHS history, as well as the single largest private investment project ever undertaken in North Dakota. Read More
EquipmentNew Holland Acquires Miller-St. Nazianz
September 3, 2014
The assets of Miller acquired as part of the transaction will become part of New Holland Agriculture, a CNH Industrial brand, building on a successful four-year partnership between the two companies. Read More
CropLife 100Pinnacle Acquires East Kansas Chemical
September 2, 2014
Ranked 82nd on the CropLife 100, East Kansas Chemical will operate as part of Pinnacle's Performance Agriculture brand. Read More
MAGIE 2014 ShowStopper
EquipmentJohn Deere Again Wins MAGIE ShowStopper Award
August 25, 2014
For the second consecutive year, John Deere was honored at the Midwest AG Industries Exposition (MAGIE) for its new R4045 sprayer. Read More
ManagementExpert To Discuss Farmland Value, Rent At Farm Science Review
August 18, 2014
While cropland values in Ohio increased in the past two years, they have remained flat in 2014, declining in some cases, according to an Ohio State University agricultural economist. Read More

Latest News

Palmer pigweed in soybean stubble
HerbicidesValent To Discontinue Gangster Herbicide
September 22, 2014
Valent will discontinue Gangster Herbicide after the 2015 growing season as growers can now deploy Fierce XLT herbicide in soybeans. Read More
Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More
Equipment2014 Farm Science Review Crowd Tops 2013 Show
September 19, 2014
The 52nd annual Ohio State University Farm Science Review welcomed more than 130,000 farmers, industry professionals, FFA students and agricultural enthusiasts during the three-day event. Read More
Seed/BiotechUSDA Approves Enlist Following Rigorous Review
September 18, 2014
Dow AgroSciences now awaits EPA registration of Enlist Duo herbicide, the companion herbicide to the Enlist traits, which is expected in the near future. Read More
BlendersYargus Appoints New Plant Manager
September 18, 2014
Steve Shaffer will direct and coordinate daily operations at the company’s Marshall, IL, manufacturing plant, where the Layco line of material handling equipment is produced. Read More
CropLife 100Pinnacle Acquires Kansas-Based Cedar Ridge Supply
September 16, 2014
Cedar Ridge Supply will operate as part of Pinnacle's Performance Agriculture brand. Read More
StewardshipSecretary Vilsack Highlights Innovative Conservation Ef…
September 15, 2014
Nearly $16 million in Conservation Innovation Grants (CIGs) will be awarded to 47 organizations to help develop cutting-edge ideas to accelerate innovation in private lands conservation. Read More
Seed/BiotechSyngenta Responds To Cargill Lawsuit
September 15, 2014
Syngenta believes that the lawsuit is without merit and strongly upholds the right of growers to have access to approved new technologies. Read More
Equipment2014 Farm Science Review Launches Mobile App
September 15, 2014
Smartphone and tablet users planning on attending the 2014 Farm Science Review can now download this year’s customized mobile application. Read More
CropLife 100Southern States Coop Grower Sets Georgia Soybean Yield …
September 15, 2014
Georgia farmer Randy Dowdy's soybeans yielded an astonishing 110.66 bushels per acre, crushing the previous record of 82 bushels-per-acre. Read More
NIMITZ Treated vs Untreated pepper plant
InsecticidesNIMITZ Nematicide Approved By EPA
September 12, 2014
NIMITZ is a novel, non-fumigant nematicide with simplified application features, user safety and an active ingredient with a unique mode of action. Read More
InsecticidesMarrone Bio Innovations Receives Patent For Chromobacte…
September 11, 2014
The patent is the first step for MBI in developing a commercially viable product to inhibit infestations of corn rootworm larvae across America and other regions. Read More
HerbicidesDow AgroSciences: Keeping The Pipeline Stocked
September 11, 2014
Dow AgroSciences is embracing product diversity to drive the company’s future. Read More
CropLife 100CHS Is Official Partner Of New St. Paul Ballpark
September 10, 2014
The new ballpark in St. Paul, MN, officially became CHS Field with Twin Cities-based CHS Inc. revealed as the naming rights partner. Read More
EquipmentHagie Honors Farming Stewardship Leaders
September 10, 2014
The Iowa Farm Environmental Leader award recognizes Iowa farmers as environmental leaders that are committed to healthy soils and improved water quality. Read More
Precision AgPlantBeat: Your Plants’ Pulse In The Palm Of Your Han…
September 10, 2014
A new agronomic monitoring and recommendation service from Phytech could rewrite the book on real-time plant health status monitoring. Read More
StewardshipCCAs Making Headway With 4R Program In Lake Erie Wester…
September 9, 2014
Certified Crop Advisers are implementing the 4R Nutrient Stewardship Certification program in Lake Erie's Western Basin to improve water quality. Read More
MicronutrientsMicronutrients Going Macro
September 9, 2014
Between 2014’s fantastic growing conditions and a heightened awareness on plant nutrition, the major players in micronutrients are gearing up for another big year. Read More