Crop Acreage Concerns High

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Heightened concerns about planted acreage appeared to be largely responsible for last week’s rally of 77½¢ in nearby July corn futures and 50¾¢ in nearby soybean futures.

At this point, it is highly unlikely U.S. corn acreage will reach USDA’s March planting intentions figure and there’s a strong chance plantings will come up significantly short due to extreme planting delays in eastern and northwestern parts of the Corn Belt, and severe flooding in the Delta and the southern Midwest.

The soybean acreage picture is not as clear as some acreage will likely be shifted into soybeans from corn and spring wheat in those areas, but overall soybean acreage appears likely to come in at or below the March planting intentions.

High price guarantees for corn under crop revenue insurance policies may make some producers quick to claim prevented planting this year rather than planting corn after their prevented planting dates or shifting acreage to soybeans.

This is especially true in North Dakota, where producers have a history of extensive use of prevented planting claims.

For producers who have opted for 80% crop revenue protection, in some cases, the prevented planting guarantee on corn may offer nearly as large a return as switching acreage to soybeans – without the added costs or the yield risk.

Estimates of U.S. corn plantings now range as low as 89.5 million acres – 2.7 million, or 2.9%, below the March intentions of 92.2 million acres.

At that level, it would take a trend-line U.S. corn yield of 161.7 million bushels/acre just to maintain 2011-2012 endings stocks at the tight 2010-2011 level. USDA, of course, has already trimmed its yield estimate by 3 bu. to 158.7 bu./acre due to the slow planting season.

We are not convinced at this point, however, that corn acreage will fall that far short of the intended level. We have little doubt that some producers in Iowa and Nebraska, where planting moved swiftly during early May, have added more corn acres and reduced soybean plantings due to better returns on corn and prospects for lower corn acreage elsewhere.

Brock Associates, however, has lowered its estimate of U.S. corn plantings by about 1.8%, which will still make it difficult to rebuild U.S. corn stocks without a slowdown in usage or perfect weather for the remainder of the growing season.

We have seen soybean plantings pegged as low as 75.1 million acres vs. the March planting intentions of 76.6 million. However, at this point, with soybean planting less than 50% complete and producers still having several weeks to plant soybeans, it is difficult to get a handle on where acreage will wind up.

 

Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

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