Farm Futures: More corn coming
According to Farm Futures’ latest survey, U.S. farmers intend to plant 96.4 million acres of corn during the 2020 planting season as a record number of 2019 prevented plant acres come back into 2020 production.
Acreage projections for the 2020 season are the second-highest planting on record after 97.3 million corn acres were planted in 2012. The USDA releases its Annual Planting Intentions survey next Tuesday, March 31. Our result is over 2 million more corn acres compared to USDA’s forecast of 94 million acres, released February at USDA’s Annual Outlook Forum. In the time between the two forecasts, the COVID-19 pandemic upended the global economy. Increased economic uncertainty, historically cheap input prices, and weakened soybean demand from China appears to have made corn the most optimal production choice amid limited options for Midwest farmers. Survey respondents expect U.S. corn plantings to increase 6.7 million acres from last year’s planted acreage. Using a five-year average yield from 2014-2018, 2020 production could top out at a record-high 15.2 billion bushels, inflating domestic supplies following a lackluster year of exports.
Soybeans up as well:
Farmers responding to the March 2020 Farm Futures survey also expect to plant 82.7 million acres of soybeans in 2020, up nearly 6.6 million acres from 2019 plantings. Survey results were 2.3 million acres shy of USDA’s February Outlook projection as farmers exhibited strong preferences for corn acreage in lieu of soybeans. But that could easily shift in the next couple weeks, depending mainly on weather factors. The benchmark soybean-corn ratio has hovered at or near the pivotal 2.4 mark for much of the year. At its current level below 2.4, the markets favor corn acreage. But corn prices have lost strength in the last week amid corn basis collapsing across the Corn Belt last week on reduced ethanol demand. The ratio is increasingly moving towards a preference for soybean acreage as ethanol plants across the country make downward production adjustments to offset shrinking profit margins. Potential purchases from China as part of the Phase 1 trade deal could further strengthen soybean prospects in 2020.