USDA Projections Amid a Cratering Non-Farm Economy

I like to plant corn. In fact, that’s what I’m getting ready to do. If you’ve read this column over the last 34 years, you’ll know, I always say, I’ll be happy when planting starts, as then I’ll be able to relax. Invariably, every year, there is more anxiety exacted on the process of getting ready to plant, vs the actual planting.

Well, it would seem in 2020 maybe there are a lot of us planning on planting corn. On March 31st the USDA released its prospective planting report, one of the 3 biggest reports of the year. The USDA pegged US corn acreage to be projected at a whopping 97 million acres, the highest since 2012. The survey which took place in the first week of March (a totally different world) showed more corn to be planted in 38 of 48 reporting states. It certainly a cornucopia of possibilities. Many farmers were god smacked on the news; corn futures sank 7 cents on the announcement only to recover later in the day.

Clearly, that news is bearish for corn. On my farm, its agronomically superior to my wheat and soybeans. In fact, this morning I made plans to tweak my plant population per acre to hopefully get even more bushels. That is surely happening across the greater corn belt. However, I don’t need to tell you that it is a different world than a few weeks ago when the USDA took its survey. Expect different numbers come June 30th, as soybeans are showing more promise.

Of course, nobody knows what price action will do. You know the drill; I’m often asked about grain markets and that’s my go to. As we move ahead in 2020, that’s even more so. At the present time we’re not even at peak COVID19 yet. It is a time of great unknown and that extends to grain prices. As we move ahead as farmers into spring, the rest of our society is in dire turmoil, like we haven’t seen before.

Corn stocks gave us some good news on the grain fundamental front. March 1st corn stocks were lower than expected coming in at 7.953 billion bushels. This meant that in the first half of 2019/20 corn disappearance stood at 8.009 billion bushels, which is the third highest on record. That’s impressive based on the fact that corn exports haven’t been stellar. Usage from December 2019 to February 2020 was 3.45 billion bushels.

The soybean number of 83.5 million acres is friendly to soybean prices. For instance, this was below trade expectations. In 22 of 29 reporting states soybean planting intentions were either the same or increased. You must remember, we had about 14 million US acres out of production last year thru prevent plant and other means. It’s filling in this year. Soybeans stocks as of March 1st were at 2.25 billion bushels, which was down 17% from this time last year, a very welcome announcement.

There has been a lot of chatter about wheat lately as prices have been more buoyant. You know the drill on wheat, being grown almost everywhere. However, in the US, USDA came up with 44.7 million acres, which is 1% less than last year and means wheat acres breaks another record. It’s the lowest wheat acreage since USDA started keeping records. At the same time, there has been rumblings from Russia halting wheat exports. However, they are just rumblings and its highly unlikely based on their market position. Needless to say, it put some juice in the wheat price dance over the last few weeks.

The question is what happens to our markets next? I’m asking this while new crop $12 soybeans and $7.40 wheat are available in south western Ontario. However, that has much to do with a Canadian dollar dancing around 70 cents US. As we move ahead, I’m going to tell you the truth. The only thing we can be sure of, is that we can’t be sure of anything at all. We are in a worldwide pandemic. Economic activity is cratering off farm. There are no guarantees.

That’s the hard part. Grain fundamentals are important, but this past week on March 31st, the USDA report was an afterthought. There are estimates of 200,000 people dying in the United States in the next few weeks via the pandemic. New York State and Michigan are two of the hot spots, which just happen to border on Ontario and Quebec. As of Tuesday, of this past week, 107 people have died in Canada.

It’s a world changing event and within it, we need to soldier on and get this crop planted and marketed. Stay healthy and have contingency plans if that’s not the case. The world economy ahead will be smaller, but we don’t know about grain demand and supply into late 2020. The USDA gave us a bit of a road map, but in 2020, it’s more like a sketch from the 1800s. Covid 19 has changed our world. There is so much uncharted water ahead.