March Intentions: High-Water Mark For Corn; Low For Soybean Acres

Posted on 03/09/2017 10:23 AM

Hello Pro Farmer Members!


USDA's March 31 reports featured a major surprise. Instead of coming from the Quarterly Grain Stocks Report, however, it was the Prospective Plantings Report that caught the market by surprise. Specifically, it was corn acreage intentions. “Everyone” knew corn acres would increase this year, but USDA signaled producers intend to plant a lot more corn than anticipated. Acres for most other crops, including soybeans, are expected to decline from year-ago.

March 1 corn planting intentions at 93.601 million acres would be up 5.602 million acres from year-ago and came in 3.629 million above the average pre-report trade estimate and 2.601 million higher than the highest pre-report forecast. That was a major miss by everyone. Corn acres are expected to be up in nearly all states -- only a handful are expected to see steady acreage and another handful are expected to reduce corn acres. No major corn-producing states are expected to seed fewer acres to corn than in 2015. If realized, USDA's March 1 estimate would be the third highest ever.

Focus now turns to whether all of the intended corn acres get planted. Corn planting is running well behind normal in the South due to excessive rains. For example, corn planting in Arkansas, Louisiana and Mississippi as of March 27 lagged the respective five-year averages by 15 percentage points, 25 points and 24 percentage points. Those three states are collectively expected to increase corn acres by 950,000 acres this year. With the calendar now reading April, it's unlikely all of the intended corn acres in these three (and other southern) states will get planted. And some Corn Belt producers are already talking about switching some acres to soybeans on ground that hasn't had nitrogen applied. USDA’s March estimate was likely the high-water mark for corn acres.

For soybeans, most market-watchers were anticipating an increase in acres. Instead, USDA showed soybean planting intentions of 82.236 million acres, down 414,000 from year-ago and 821,000 acres below the average pre-report trade estimate. Soybean acres are expected to be down in 20 of 31 states USDA estimates. Across the Corn Belt, only Illinois, Michigan, Missouri, North Dakota and Wisconsin are expected to plant more soybean acres than year-ago. But if all of the intended corn acres don't get planted due to weather and/or price performance since USDA's survey work was completed, that could change. In all likelihood, USDA's March planting intentions figure was the low-water mark for soybean acreage.

Combined corn and soybean planting intentions at 175.837 million acres would be up 5.188 million acres from last year. Given last year’s heavy prevent-plant acres through the southern Corn Belt, an increase in combined corn and soybean acres is not a surprise. Still, the two-crop total is heavier than expected.
When compared to 2015 intentions, corn and soybean planting intentions are up 2.003 million acres. That takes last year’s prevent-plant acres out of the equation and signals the sharp price downturn did little to deter farmers from wanting to plant corn and beans.

As for the total crop mix, total “principal crop” acreage is expected to fall to 317.3 million acres this year. While that would be just 1.2 million acres (0.4%) less than 2015, it would be down 9.1 million acres (2.8%) from its 2014 peak of 326.4 million acres. USDA’s March planting intentions survey indicated plantings of the eight major crops (corn, soybeans, wheat, cotton, rice, sorghum, barley and oats) are expected to be 251.1 million, down just 464,000 acres (0.2%) from year-ago. The sharp drop in commodity prices is causing more acres to be taken out of crop production, with nearly two-thirds of the acreage decline occurring outside of the eight “major” crops.

Keep in mind, March planting intentions are just that -- intentions. Some of those intentions will change whether it's because of weather, price or some other factor. USDA's March planting intentions are a benchmark from which to add or subtract acres. From my view, it's likely to be a subtraction from corn acres and an addition to soybean acres.

 

That's it for now...

... have a great weekend!

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