Last week’s Allendale survey suggested that 2018 will not be the year of “King Corn.” But could there be a factor or two that saves corn acreage in the month ahead?
Ahead of the Prospective Plantings Report on March 29, private estimates place corn acreage at 90.0 million acres, according to a report at Agriculture.com.
That figure would be about 1.5 million acres larger than the figures from the Allendale report just last week. It might also indicate that many farmers are holding the line and possibly worrying about retaliation on soybeans from China.
The USDA previously estimated that there would be 90 million acres of both soybean production and corn production. Allendale also suggested the total production of 14.145 billion bushels of corn and 4.429 billion bushels of soybeans.
The question, however, is whether ongoing trade issues are playing a factor in farmers’ decisions instead of traditional pricing ratios on the futures market.
Michael Castellano at Iowa State took to Twitter shortly after the release of Mike McGinniss’ state-by-state look at different farmers’ decisions and asked how it relates to another major story in today’s headlines.
If they’ve already priced their new crop to the futures market, then not at all.
That’s why I’ve reached out to Castellano and asked for clarification. There are two other ways to consider the question.
One is measuring the impact of retaliation from larger markets export markets due to steel tariffs by the Trump administration on corn or soybeans…
Or the impact of the European Union’s possible tariffs (which isn’t a large market for U.S. corn).
We’ll dig into one or both of those questions on Friday.
On the latter, the initial expectation is that it wouldn’t due to decisions being made on the ground right now and the small percentage of U.S. exports sent to Europe.
It’s worth measuring… so give us some time to look into the numbers.
UNOFFICIALLY, PUT DOWN MORE SOYBEAN ACREAGE IN THE U.S.
DES MOINES, Iowa — As spring arrives, the countdown to the 2018 planting season begins for Midwestern Corn Belt farmers.
The agronomics, input prices, and grain marketing strategies vary, but there seems to be a Corn Belt-wide theme floating to the top for 2018…..more soybean acres.
Officially, the USDA will release its Prospective Plantings Report on March 29, 2018. Private analysts firms that have released their acreage estimates, ahead of the USDA, have indicated U.S. farmers will plant 92.0 million soybean acres and 90.0 million corn acres.
If realized, it would be the first time ever that the U.S. has planted more soybean acres vs. corn.
The anecdotal evidence supports a move towards more soybeans, mainly due to the market rallying over $1.00 per bushel, since January.
The corn-to-soybean ratio, a traditional benchmark for farmers trying to decide which crop to plant has been favoring soybeans, this winter.
A price ratio of 2.5 or above indicates soybeans are more profitable. Since January, the widest ratio has been 2.6.
John Mutschler, a south-central Minnesota farmer says the early talk on acreage matches how he is feeling.
“I’m planting the most soybeans, this year, in my farming career,” Mutschler says. This year, for the first time, my crop split will be 50/50. I’m normally a lot heavier on the corn side.”
Weather will dictate final planting decisions, Mutschler says. “It’s been very cold, here. We have a deep frost. So, I do see a later spring vs. the early planting springs in the past three years. This would favor more soybean acres. Plus, corn profitability is in the red again.”
In fact, the Minnesota farmer is in no hurry to get the planter out of his shed.
“I’m going fishing, today,” Mutschler says. “The temperatures just won’t warm up. We got a dusting of snow Monday night.”
Minnesota, the third largest U.S. soybean-producing state, grew 8.7% of the nation’s crop in 2017.
Illinois, the top-producing soybean state making up 14% of the nation’s total production, is expected to increase acreage between 3-4%, according to Mark Hobrock, General Manager of Western Grain Marketing.
“From the folks that I talk with at the cooperatives, seed salesman, and all of the winter meetings that I have attended across the country, west-central Illinois farmers could be up 8% on soybean acreage this year,” Hobrock says.
Unlike Minnesota, Hobrock says the frost is out of the ground in his area, allowing farmers to apply anhydrous this week for pre-plant.
The first corn seed will go in the ground, in the first week of April, on the Illinois side of the Mississippi River, across from Louisiana, Missouri, Hobrock says.
“We are expecting a normal planting weather season, supporting the idea for more soybeans,” Hobrock says. “We’re moving anhydrous from Jacksonville to Galesburg, Illinois. Our subsoil moisture has improved, tiles are running, and things are going well around our territory.”
In addition, because west-central farmers have recorded four consecutive record soybean yields, their lenders and other advisors are suggesting that they stay with soybeans, Hobrock says.
In Iowa, Chris Soules, a farmer in the northeastern part of the state, says the conditions are looking good for this upcoming planting season.
“Our subsoil moisture looks good, tiles are actually running, and for most of the winter we have had significant amounts of snow cover,” Soules says.
Iowa farmers grow 12.8% of the nation’s total soybean crop. That’s the second largest amount, only behind Illinois’ 13.9%.
Soules says that yields in his area averaged in the 60’s last year for soybeans and over 200 bushels per acre on corn.
“It was surprisingly good here, last year, considering the hot August temperatures. “I’ve never seen anything like it. The cool nights were unseasonably cool, perfect for finishing out the plants. If we would have had our normal heat, I would have expected 20-30 bushels taken off the top-end of our yields,” Soules says.
So, farmers in that northeast Iowa area are entering 2018’s planting season having recorded better corn last year than in the high-yielding year of 2016.
Will this sway this Iowa farmer to stay with more corn, going against the national trend?
“I think a lot of people are going back to more of a rotational crop production,” Soules says. Yes, this could mean more soybean acreage. I think bean yields have caught up with corn yield potential, bean demand looks good, the cost of production on beans is less than corn, and there is less risk.”
Soules adds, “If you looked at our farm three to four years ago, our farm would have been much more corn-on-corn. Now, we’re simply doing corn-on-corn for weed control, trying to reduce tillage and production costs.”
“From the guys that I talk to, that is pretty typical. People are concerned about conservation. And it’s part of our job as farmers to improve that,” Soules says.
Over the winter, the talk was that the majority of the expected 2.0 million additional soybean acres would be planted in the Dakota states and in the eastern Corn Belt.
Justin Barnes, a Columbus, Ohio, farmer says that based on the good corn and soybean yields experienced last year, most area farmers will stick with an even crop rotation.
“It would take a real extreme event to change acreage,” Barnes says. We may have a slight uptick on bean acreage. I’m personally bullish on corn, considering a tightening carryout situation building. I haven’t priced a lot of corn, yet.”
Right now, Barnes sees a normal planting season.
“I don’t see any delays in planting. There is no frostline, tiles are running, and when the temperatures hit 70-degrees in the first week of April, corn will be planted,” Barnes says.
Barnes admitted that the farmer sentiment seems to be less than optimistic, heading into this year’s planting season.
“No one seems real positive. Last year was a little discouraging, as the growing conditions seem to signal that the markets should have gone up, but then the guys out west just kept reporting great yields,” Barnes says.
Barnes says that farmers are making acreage decisions much like other operational decisions.
“A lot of guys are not buying equipment, sticking with no-till and regular crop rotation. They are playing it safe,” Barnes says.