As surprises go, for me personally, this was a head scratcher. No, I’m not talking about last week’s USDA report. However, that probably fits in that mold too. This past spring I’ve got some wild carrot, which is growing in my soybean fields, which shouldn’t be there. I think having to leave the soybean ground until the end of June to burn down gave it a head start. Needless to say, seeing more wild carrot in my fields more than I’ve ever seen before at this time of the year comes as a surprise.
I’ve been fighting back against my wild carrot with some herbicide. So at least I have some control over that. However, please explain to me my other surprise last week. In the August 12th USDA report, the USDA reported total corn production in the United States would be 13.9 billion bushels this year based on an increased national yield of 169.5 bushels per acre. I was surprised enough with that, but then I found out planted corn acres were set at 90 million, down from 91.7 million reported in June. However, then I learned “Prevent Plant” acres for corn came in 11.21 million acres. That was a head scratcher. Old crop corn stocks, which will become beginning stocks in September, were pegged at 2.36 billion bushels.
Needless to say, December corn futures have lost $1.02 since June 17th. When USDA announced the acreage figure on August 12th, corn went down the limit, something you do not see very much anymore in the markets. In other words, the river has grown wider with the expanded trading hours over the years and surprises are usually absorbed like a ripple on a wide river. On August 12th, confusion reigned as many people were expecting a more bullish report and we can all add up 90+11. That figures out to 101 million corn acres in theory, which were actually intended to be planted in the United States this year. It didn’t pass the smell test. Many people are still wondering. In the meantime, the market is trading the numbers, which it was given. Apparently, this is not 1993 and we didn’t plant 1993 corn genetics. I am still claiming ignorance on how the acreage picture was put together. As a Canadian, I think that you can grant me that latitude. The closest I’ve gotten into an explanation has to do with prevent plant acres getting accumulated over past years and added into this years figure. There was also quite an incentive for farmers to plant corn based on MFP payments that would be applied if they got it planted. Simply put, the corn market right now is a smoking train wreck. It’s taking no prisoners.
On the soybean side of the ledger it was not as surprising, although the soybean acres were less than I had expected and less than the June report. USDA has pegged soybean acres at 76.7 million, which is less than the 80 million predicted last month. They pegged soybean “prevent plant” acres at 4.35 million. US National soybean yield was pegged at 48.5 bushels per acre for a total production of 3.68 billion bushels. This is a 19% drop from last year’s production. The 2019/20 ending stocks are now pegged at 755 million bushels. In other words, there are still a lot of soybeans in the mix.
There is always a bit of gnashing of teeth over USDA announcements. Just think of it this way. You’ll be able to look back and remember the day when USDA announced there was 11 million prevent plant corn acres in the United States and the market went down the limit. Whoa! USDA added that total wheat production was up 5% from last year.
What can USDA do for an encore? It is hard to say. DTN is currently engaged in a digital Yield Tour with Gro Intelligence and this is showing yields much lower than the USDA is expecting. Gro Intelligence is using real-time yield maps, which are generated with satellite imagery, rainfall data, temperature maps and other public data. Let’s just to say, there is much yield conjecture in the countryside. I had one Ohio farmer exclaimed to me that they had one of the highest corn basis in United States. The only problem is they don’t have any corn! I responded back to him by telling him that’s helping us in Ontario. However, the corn crop in Ontario and Quebec is not quite what it was last year either. As I’ve said many times it is likely we Eastern Canada will have a corn deficit in the coming year. Basis is already showing that.
So about my wild carrot? Well, to be truthful, I noticed about the time I burned down the first time, but couldn’t quite believe what I was seeing! I thought my nuclear burn down would work. Needless to say, here we are, wild carrot along with one of the more surprising USDA reports of the year.
So maybe I deserved the wild carrot, but the latest from USDA, I dunno. That 101 million acres of mythical intended corn acres, I never saw coming. It just goes to show, the USDA always re-sets the goalposts. We should never be surprised like this.