March 19, 2021
After the February and March USDA reports were complete duds, producers might get lulled to sleep when looking ahead to the March Planting Intentions report coming on the last day of the month. I mean, we all have better things to do right now than worry about that. From getting equipment ready to watching the NCAA tournament (Illinois is going to win I’m plenty certain) we all have plenty on our plate.
However, ignoring the impact this historically volatile report can hold might be unwise.
Quarterly stocks bright spots
I’ll throw just a blurb in here on the other part of the report, which is quarterly stocks. My personal opinion is this could be a bright spot, especially for corn. From robust feed usage to better-than-expect corn usage for ethanol along with big export inspections to date, I expect disappearance to be solid and potentially a bullish surprise.
For soybeans, I doubt the stocks situation will hold much in the way of surprises, but if it did, it may be tough to assume that surprise would be bearish. While crush was off in February, mostly due to harsh weather, that is largely known.
What about acreage?
I’d like to quantify my take on total corn and bean acres first. Looking at the last three years, we planted 90.8 million acres of corn and 83.1 million acres beans in 2020. 2019 was of course smaller due to excessive flooding, but in 2018, we planted 89.1 of corn and 89.2 of beans. Since 2018 was the year with the most total combined acres in our recent history, I’d like to see how the spring insurance price compares to 2021’s price.
In 2018, corn’s February average was $3.96, while beans averaged out at $10.16. This year, we have spring insurance prices of $4.58 and $11.87, both sharply higher than our reference year.
With USDA Outlook Forum predicting 92 ma of corn and 90 ma of beans, we’d have a new record for combined corn and bean acres. I’ll still take the over and predict ‘intentions’ of 184.
It could be hard to plant this many acres but given substantially higher profit margins than we’ve seen in eight years, one has to assume the producer’s intention as of March 1st was to plant as many acres as possible.
Now who wins the acreage battle? With the derecho event in Iowa this past summer, many producers are likely to plant relatively more beans due to agronomic challenges from down corn. So, Iowa likely is heavier beans than normal. I doubt was see any other big anomalies as far as corn versus beans.
Looking at the fact most of us had a good fall for fieldwork, it suggests to me there’s less ‘swing acres’ available than we typically see. We also saw both corn and beans posting less of a rally through harvest. When fall fieldwork was taking place, say on November 1, Dec21 was in the mid $3.80s while Nov21 was still sub-$10. For fall, whether talking profitability or the fact we had good conditions for fieldwork, it would be hard to convince me corn wasn’t the winner on acreage.
Based on these factors, I’d take corn with a nice advantage…say three million acres.
Higher nitrogen costs
For soybeans, we must realize some gains could be possible in those ‘swing acres.’ Yes, they’re likely smaller due to the good fall, but the winner or those acres seems clear to me. Given anhydrous prices have shot up close to double that of last fall in some areas, and dry fertilizer has performed similarly, many producers have seen the per acre costs to plant corn go up $40-60 per acre. Given the swing in profitability, it’s tough to not give the advantage on swing acres to soybeans; let’s say beans get back a million acres.
All in all, it’s reasonable to think the disparity between corn and beans could be up to the two million I’ve suggested here. When it gets down to it, U.S. producers love planting corn. However, times have been a changing, and bean profitability and advancements in yield potential have been tough to ignore.
While I won’t be shocked by much of anything in the report on March 31st, the one thing that would surprise me would be if corn acres aren’t bigger than beans. I think corn stays king on acreage with intentions up to 93 million while beans could come in up to 91 million acres.
Good luck and be safe this spring. And go Illini!
Reach Matt Bennett at 815-665-0462 or [email protected]
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