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Articles from 2020 In March


dfp-ronsmith-planters.JPG Ron Smith

Delta grain acreage is up, cotton declines, peanuts mostly unchanged

Mid-South 2020 planting intentions closely mirror U.S. figures for corn, soybeans and cotton but show higher overall numbers for rice and slightly less acreage for peanuts.

Nationally, the latest prospective planting report shows corn planted acreage up 8%, soybeans up 10%, cotton down less than 1%, all rice up 12% and peanuts up 7 percent.

Breaking down the Delta numbers by state and crop, Arkansas estimates 2020 corn planted acreage at 800,000 up 4% from last year's 770,000. Louisiana, corn estimate, at 680,000 acres, is up 19% from 2019's 570,000 acres. Mississippi, at 710,000 acres is 8% higher than 660,000 last year. Missouri estimate is 3.6 million acres, up 13% from 3.2 million last year. And Tennessee, at 1.04 million is 7% higher than 970,000 last year. Nationally, USDA estimates corn acreage will increase by 8%, 96.99 million acres, up from 89.7 million.

Soybeans

Arkansas soybean estimate puts 2020 acreage at 2.9 million, up 9% from 2.65 million in 2019. Other estimates include Louisiana, 980,000 acres, up 10 percent from 890,000; Mississippi, 1.85 million acres, up 11 percent from 1.66 million; Missouri, at 5.8 million, is 14% more than 5.1 million; and Tennessee's 2020 estimate of 1.5 million is 7 percent higher than last year's 1.4 million acres.

Nationally, soybean farmers expect to plant 83.51 million acres, a 10% increase from 76.1 million acres.

Cotton

With the exception of Missouri, Mid-South cotton acreage will decline. Missouri estimates indicate a 5% increase at 400,000 acres, up from 380,000 last year. Arkansas will decrease cotton planting by 5 percent, 590,000 acres compared to 620,000 in 2019.

Louisiana cotton acres will decline by 18%, 230,000 compared to 280,000 last year. Mississippi acreage projections, 660,000, is down from 710,000 last year, a 7% drop. Tennessee cotton acreage drops 12% to 360,000 acres, down from 410,000.

Nationally, USDA estimates cotton acreage about equal to last year, 13.703 million from 13.737 million last year.

Rice

The Mid-South is poised to increase all rice planted acreage significantly: a 21% percent increase in Arkansas, 1% in Louisiana, 28% in Mississippi; and 6% in Missouri. Nationally, all rice estimated plantings is 2.87 million acres, up 12%.

Arkansas long grain rice acres will increase 25 percent, 1.19 million acres from 950,000 last year. Louisiana will plant 390,000 acres in long grain rice, a 5% bump over 370,000 last year. Mississippi estimate, 150,000 acres, is 30% higher than last year's 115,000. Missouri increases 6% to 190,000 compared to 180,00 last year.

Medium grain rice shows a slight decrease from 2019. Arkansas holds steady at 205,000 acres; Louisiana drops from 55,000 medium grain rice acres to 40,000, a 27% decline. Missouri, at an estimated 9,000 acres, is up 29% from last year's 7,000.

Arkansas will produce only 1,000 acres of short grain rice, same as last year.

Combined, all rice production for Mid-South states shows Arkansas at 1.396 million acres; Louisiana, 430,000; Mississippi, 150,000; and Missouri 199,000.

Peanuts

The Mid-South will plant 55,000 acres of peanuts, according to USDA estimates, 35,000 in Arkansas and 20,000 in Mississippi. Arkansas acreage is up 3% from last year's 34,000. Mississippi acreage is unchanged from 2019.

 

 

 

 

Max Armstrong's Daily Updates

MIDDAY Midwest Digest, March 31, 2020

A distance of 6 feet apart might not be enough, says one researcher of exhilations.

USDA reports will be overshadowed by COVID-19 and economic recovery, says one analyst.

A son of the son of the Great Depression, Max offers his perspective as he watches what's happening in our nation. 

Cheatgrass firestorm in Nevada BLM Nevada
Firestorms in the West are usually caused by large fuel loads of cheatgrass.

Fall cheat grazing saves money and cuts fire danger

Research and practical experience are showing cost-savings, fire reduction potential and forage improvement from late-season grazing to remove fuel loads on cheatgrass-dominated rangelands across millions of acres in the West.

A project in Oregon is furthering this cause. Cooperators include the University of Nevada, the Burns District Bureau of Land Management (BLM), Oregon Cattlemen’s Association, Oregon Beef Council, Harney County Court and Bill and Pat Wilber’s Drewsey Field Ranch in southeast Oregon.

This is vital work because in the past several decades fire has become the biggest threat to natural resources in western states, says Robert “Bob” Alverts, a consultant and part-time faculty member of the University of Nevada, Reno. Wildfires on this scale destroy wildlife habitat, timber resources and livestock forage.

Alverts also notes a map showing location of large fires since 1970 correlates with range adjudication, which is BLM-speak for the time when the agency started reducing cattle grazing on public land under the notion that this would improve rangeland health.

“Ungrazed forage becomes fuel. With excess fuel loads, fire burns hot enough to destroy perennial plants and the former grass/shrub plant community is replaced by invasive annual grasses like cheatgrass,” he says. “Fire-return intervals are shortened, fire burns more readily the next time, and range condition and fire danger keep getting worse, spiraling negatively.”

In contrast, he says there is not as much fire damage on properly-grazed range or well-managed forest.

“It’s all about plant density and fuel loads,” Alverts says. “Federal agency suppression costs are more than double the budgets for fuel reduction treatments. Reducing fire risk through active management practices such as late-season grazing and timber harvest is much less costly and can generate revenue for rural communities, providing economic livelihoods to ranchers, improved environmental conditions and essential food and fiber.”

Cheatgrass-dominated site in Oregon

This beginning picture on Upton Mountain in Oregon shows a dominance by cheatgrass and a nominal presence of crested wheatgrass, which once dominated the site.

The Drewsey Field Ranch BLM allotment is typical of public land like many ranchers operate. It’s a 14,000-acre allotment and the Wilbers have a permit for 330-550 or more cows. Given the large area, limited grazing period and small number of cows, it will take several years to fully change the plant community and effectively reduce cheatgrass dominance, Alverts says. But after eight years he says they are making progress and improving the land with planned grazing as a tool.

This fall cheatgrass grazing also saves the ranchers money because they don’t have to feed hay during those months of fall grazing. The cows graze 90 to 100 days, usually mid-October into January. The BLM authorizes late-season grazing on this allotment, but most BLM allotments don’t have provisions for fall grazing in their Allotment Management Plan. That means most ranchers are not allowed to graze their allotments in the fall, and millions of acres that could be treated for cheatgrass reduction are instead set up for firestorms.

Fall-grazed cheatgrass

A heavy fall grazing, not normally allowed by BLM rules, has stripped away the cheatgrasses, as well as some of the wheatgrasses.

“The plus with late-season grazing is that it doesn’t hurt the land or grass,” Alverts says. “All the forage is dormant at that period of use. This allows us to heavily graze annual plants like cheatgrass. At that time of year cows actually prefer these annuals over the rank, mature bunch grasses.”

By fall the sharp seeds have dropped off, and after fall rain the cheatgrass softens up. “We distribute protein supplement to attract cattle to various areas across the pasture,” Alverts says. “They crave the supplement and it enables them to digest the fiber (and they can eat a lot more grass) and makes them also crave the fiber. We keep moving the supplement around, and influence how the cows graze the cheatgrass. Over time the reduction in cheatgrass enables perennial grasses to come back and dominate plant communities in those areas.”

3 years grazing on cheatgrass

After just three years of fall grazing, crested wheatgrass again dominates the site and cheatgrass has declined dramatically.

Alverts says he has a similar project on the Roaring Springs Ranch in Oregon with ranch manager Stacy Davies. He adds, “It’s only a 1,400-acre pasture, but it’s private land so they can manage it the way they choose. They put 1,500 cows in there the first year (2012) to eat the cheatgrass. There was 2,000 pounds of cheatgrass per acre in that pasture. Cows were in that pasture for 60 days and grazed it off to a fuel load less than 100 pounds per acre,” he says.

“When we get below 200 pounds per acre, fire risk is significantly reduced, and likelihood of catastrophic fire is largely gone when fuel loads are under 100 pounds per acre. Now we are seeing shrubs come back, and perennial plant communities that are not as prone to catastrophic fire. We’ve slowly changed the plant community in a positive way,” Alverts says.

Alverts says this late-season grazing saves about $50 per head per month, and that cattle body condition scores are good with protein supplementation. The progress they are seeing in repairing the native plant communities is promising.

03207001D-cheatgrass.jpg

This picture of the fall forage before grazing compares nicely to the first picture, showing wheatgrass as the dominant species.

CARES Act impact on agriculture

How will the coronavirus aid package impact ag?

On March 27 President Trump signed the Caronavirus Aid, Relief and Economic Security (CARES) Act into law, following unanimous passage by both the U.S House and Senate. The CARES Act authorizes up to $2.2 trillion in aid and financial assistance do deal with the health and economic impacts from the COVID-19 virus pandemic in the United States. This is one of the largest and most comprehensive financial bills ever passed by Congress.

Overall, the CARES Act provides approximately $48.9 billion for United States Department of Agriculture (USDA) programs. To put this in perspective, this dollar figure represents over 50 percent of the annual funding allocated for all USDA programs under the 2018 Farm Bill. An important portion of this funding, $14 billion, is allocated as additional funding authority for the USDA Commodity Credit Corporation (CCC). The CCC funds were used to make the 2018 and 2019 market facilitation program (MFP) payments to specific crop and livestock producers, as well as to fund other USDA programs. The aid package also authorizes an additional $9.5 billion emergency fund that is targeted toward dairy and livestock producers, fruit and vegetable growers, and fresh food markets.

The CARES Act provides $15.5 billion in additional funding for the of the USDA Supplemental Nutrition Assistance Program (SNAP) and an additional $8.8 billion for child nutrition programs. While not providing direct assistance to farmers, added funding for these programs will help maintain and increase demand for certain ag products. The dairy industry and fresh food markets have been hit especially hard by the lack of demand due to school closures and the shutdown of restaurants across the U.S. The legislation also provides some added support to rural hospitals and medical services, as well as for other local government functions.

Many farm families may also qualify for the direct cash payments to families and individuals that are included in the CARES Act. Any individual who earned less than $75,000, based on the adjusted gross income (AGI) in either their 2018 or 2019 federal tax return, would receive a direct payment of $1,200 from the federal government. Married couples with an AGI of less than $150,000 would receive a payment of $2,400. There would be an additional payment of $500 for every child claimed on the 2018 or 2019 tax return. These direct aid payments are expected to be made in April.

One aspect of the CARES Act that has garnered some attention related to agriculture is the $350 billion allocated to the U.S. Small Business Administration (SBA) to guarantee loans to small businesses. Small businesses and employers are defined as those with 500 or fewer employees. One interesting aspect of the SBA emergency loans is a provision that allows a portion of the loans to be forgiven, provided that the business maintains and pays their current employees. Many ag-related businesses and employers are looking into whether they may or may not qualify for these SBA emergency loans. Businesses that already utilize SBA loans will likely qualify for the emergency loan program, while other businesses will have to apply to see if they meet SBA qualification guidelines. Interested businesses should contact a local bank that is a certified SBA lender for more details on qualifications and the application process.  

Ag impact Q&A

Does the added CCC funding in the new CARES Act automatically mean there will be a third round of MFP payments in 2020 ?

Not necessarily. The 2018 and 2019 MFP payments were related to lost income due to the trade war with China and other countries. It is not apparent if the coronavirus will necessarily impact the new trade agreement with China or ag trade with other countries. However, given the added funding provided to the USDA and the CCC through the emergency legislation and the financial challenges facing farm operations, it is highly likely that some form of assistance similar to MFP could be made available to farmers and ranchers in the coming months. The aid package may look different than the 2018 and 2019 MFP payments and will likely involve more commodities, especially with added USDA emergency fund for targeted commodities.

What strategies can be utilized following the sharp price decline for unsold 2019 corn and soybeans that are still in storage on the farm ?

Many farm operators have a considerable amount of unsold 2019 corn and soybeans in farm storage. Following the coronavirus outbreak in the U.S., there was an immediate sharp drop in grain prices. The local cash corn market was hit especially hard, not only experiencing price drop on the Chicago Board of Trade (CBOT), but also having a rapid widening of local basis levels.

That combination caused local cash corn prices to drop 50-60 cents per bushel in just a few days at many Midwest locations. In addition, many ethanol plants and other local grain markets are currently not accepting corn or only doing so on a limited basis.

One strategy farmers could utilize to get some temporary revenues from their unsold grain in storage is to take advantage of the CCC commodity loan program through local Farm Service Agency (FSA) offices. Local CCC loan rates vary from county to county. Loan rates are generally slightly over $2 per bushel for corn and $6 per bushel for soybeans in many areas of the Midwest. Be aware that due to the coronavirus, most FSA transactions need to be completed via phone or e-mail.

Will the decline in cash grain prices impact 2019 farm program payments ?

Any 2019 farm program payments for the PLC, ARC-CO and ARC-IC programs will be based on the final 2019 market year average (MYA) prices for corn, soybeans and other crops. The 2019 MYA price for corn and soybeans is based on national average monthly farm-level prices from Sept. 1, 2019 through Aug. 31, 2020, which are weighted for the percentage of bushels sold in each month. The 2019 MYA price projections as of March 1 were $3.80 per bushel for corn and $8.70 per bushel for soybeans. Further declines in the MYA prices would potentially enhance ARC-CO and ARC-IC payment prospects for producers that are likely to qualify, if they have not reached the maximum payment level. Corn and soybean PLC payments for 2019 still appear unlikely at this time, as do ARC-CO payments for corn in many counties.

Why is it important to communicate with your ag lender, farm management advisors and family partners during financial challenges we are facing ?  

View ag lenders, farm business management instructors, marketing advisors and other consultants as informal partners in a farm business. Ag lenders can be a valuable resource in making management decisions and understanding some of the emergency financing tools that may be available. It is best to include all partners and family members that are part of the farm operation in the discussion process, so that all key players are on the same page regarding financial decisions and adjustments that may affect the farm business.

Coronavirus
beef-calf-mary-hightower-uark-33752494648_8e780d595c.jpg Mary Hightower/University of Arkansas System Division of Agriculture

Cattle industry feels effects of COVID-19 pandemic

COVID-19 is causing uncertainty throughout the agriculture industry, and cattle producers are feeling the strain as unprecedented unemployment and consumer uncertainty have rattled the financial markets.

“We’ve all been impacted, and we’re in uncharted waters,” said Michael Looper, professor and head of the Department of Animal Science for the University of Arkansas System Division of Agriculture.

Looper and other experts with the Division of Agriculture and the Arkansas Cattlemen’s Association recently connected with nearly 200 cattle producers in an online webinar to discuss the impacts of COVID-19 on the cattle industry and offer guidance for navigating an unpredictable future.

Mirroring financial markets

For the most part, cattle futures have taken cues from outside markets, with losses in cattle futures correlating with losses in the broader financial markets.

“The short-term markets are being whipsawed right now,” said John Anderson, head of the Department of Agricultural Economics and Agribusiness with the Division of Agriculture.

Live cattle contracts lost 25 percent of their value between mid-January and the third week of March, with most of drop coming after mid-February.

“The bigger issue this spring with COVID-19 was behavior of the cattle futures market,” Anderson said. “Money was running scarce, and live cattle futures were caught up in that dynamic. When you have futures prices dropping more rapidly than the cash price, that puts feedlot managers in a poor negotiating position.”

Market fundamentals were also worse than expected in the first quarter, even without the pandemic. According to USDA figures, beef production was up 6.7 percent in the first quarter compared to a 7.9 percent increase for pork and 8.3 percent for broilers.

“If the COVID-19 outbreak has abated in the next month or so, the rebound in markets could be relatively quick, especially if support from the supply side of the market does materialize in the latter half of the year,” Anderson said.

Panic buying drains supply chain

COVID-19 spurred panic buying as consumers rushed to stock up on meat and other staples, draining the supply and causing a run-up in wholesale prices.

“Panic buying is not the same thing as an increase in demand,” Anderson said. “It might look like it, but it’s really not. Essentially, it is pulling demand from later periods ahead to today. It creates a short-term shortage.”

That shortage has been seen at grocery stores as well in disruptions to the restaurant trade, which accounts for about half of beef consumption.

“Retailers and packers are working hard to refill the supply chain after this spate of panic,” Anderson said. “Processors are thinking ahead to what will happen with supply chain disruptions if people can’t work, if the supply chain shuts down, or if we can’t get workers in place.”

If restaurants reopen, the market could rebound. If closures continue for another few months, consumers will need time to rebound financially and recover from drawing down their savings.

“It’s all highly dependent on how long we stay closed,” Anderson said.

Wealth effect

In times of uncertainty, people spend less and save more due to perceived risk. With jobless soaring, Americans are experiencing unprecedented loss of income.

“The numbers are sobering to look at,” Anderson said. “This is the kind of thing that will contribute to negative impacts on the industry.”

In downturns, consumers tend to seek products at the lower end of the price scale. Beef, however, doesn’t have extensive low-cost product offerings.

The second half of 2020 is expected to fare better in supply, but beef production overall is expected to be down a couple percentage points, Anderson said.

Options for beef producers

Jody Almand, senior credit analyst with Farm Credit of Western Arkansas, said producers have some options if they find themselves in a financial shortfall:

Extend a payment for a period of 30, 60 or 90 days. A payment extension is usually a one-time occurrence and is sometimes the best fix for a short-term problem.

Re-amoritize a payment. A re-amoritized payment, or REAM for short, lets a producer make a partial loan payment with the difference added to the end of the loan. In some instances, the maturity can be extended in exchange for lower payments.

Rebalance the loan. Similar to a refinance or debt restructuring, a rebalance spreads debt over a longer term, lowering payments if needed.

beef-calf-mary-hightower-uark-46905528854-0bab7b5983.jpg Mary Hightower/University of Arkansas System Division of Agriculture

Effective forage planning critical for cattle operations

John Jennings, a professor and Extension forage specialist for the University of Arkansas System Division of Agriculture, offered advice for spring forage plans, reminding producers to allow 30 days after implementing a practice to see the effect. Jennings was among the speakers during a webinar about COVID-19 impacts on the cattle industry.

Jennings offers these tips:

• Start rotating pasture immediately to allow for forage accumulation.

• Close gates or divide large pastures with single electric polywire to allow forage to accumulate.

• Fertilize cool-season grasses and winter annuals as soon as possible.

• Repair and overseed hay feeding areas.

• Target fertilization for existing forages; Fertilize cool-season grasses like fescue and winter annuals such as ryegrass as soon as possible; Fertilize bermuda in early May.

• Plant oats or ryegrass for spring grazing or hay as soon as possible.

• Plant summer annuals such as pearl millet, sudangrass, corn, or crabgrass in May and June for summer grazing.

Growing Young Green Seedling Sprout in Cultivated Agricultural Farm Field close up FabrikaCr/iStock/GettyImagesPlus

Should you still bet on corn?

USDA’s end-of-March reports are typically a big deal in the commodity market. This year the data on grain stocks and prospective plantings could mean a lot – or nothing.

Acreage projections for corn and soybeans appear most likely to wind up in the waste basket. USDA said farmers want to devote 97 million acres to corn and just 83.5 million to soybeans. Government statisticians gathered data from farmers on their plans during the first two weeks of March, when December corn futures strengthened relative to soybeans. The soybean-to-corn ratio hit a low of 2.3025 to 1 on a closing basis March 16. It ended March at 2.455 to 1, a level that typically encourages farmers to consider soybeans.

Corn profits eroding

Farmers love to plant corn. That bias was justified during the golden age of the ethanol boom, when average corn profits topped soybeans by $100 per acre or more. But after peaking in the wake of the 2012 drought, corn profitability slipped compared to soybeans. Soybeans netted more than corn from 2013 to 2018 thanks to Chinese buying. Corn could end up behind again for 2019 crops, with six uncertain months to play out in the marketing year.

Though China was slow to return to the U.S. soybean fold following the phase one trade deal, the collapse of the ethanol industry hammered corn even more. The COVID-19 pandemic destroyed ethanol demand, crushing margins already deep in the red in the wake of the crude oil price war triggered by Saudi Arabia.

Like the acreage numbers, the other big report out March 31 also failed to capture these dynamics. March 1 grain stocks reflect usage in the second quarter of the marketing year that took place in world that looks completely different today.

Apparent corn usage to make ethanol from September through February appeared to be a little above the previous year, boosting an industry hoping to benefit from increased E15 demand this summer. Now the best case scenario for the biofuel is for blending at the 10% level as gasoline usage plummets with cars parked indefinitely around the world.

This outlook muted an otherwise bullish stocks assessment for corn. USDA put March 1 corn stocks at 7.95 billion bushels This figure was slightly higher than my own estimates, but came in 172 million below the average trade guess.

The discrepancy may just result from statistical error always present from one survey to the next. With the crop last estimated at 13.7 billion bushels, a 1.3% error wouldn’t be egregious. Smaller stocks may also reflect continued strong feed usage; wheat feeding also appeared better than expected over the winter.

But coming on the heels of smaller than expected Dec. 1 corn stocks, the data may also be a sign the crop is smaller than USDA estimated in January, when some fields were still unharvested.

Updated production data is expected later this spring, but the debate may be moot. Instead, expect spring markets to focus on how many acres farmers will plant due to weather and economics. Current new crop prices won’t cover the full economic cost of soybeans assuming average yields, but show a positive cash flow. Corn is still in the red, but could still find favor if growers bet that the next round of government aid helps them pay the bills for another year.

Average Corn Belt Ethanol Plant Margins

Average corn v soybean profit loss

Knorr writes from Chicago, Ill. Email him at brycemarkets@gmail.com
The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 
milk jugs in a dairy case_nanoqfu_iStock_Thinkstock-178769490.jpg nanoqfu/iStock/Thinkstock

DFA, others acquire Dean Foods' assets

Dairy Farmers of America will acquire a substantial portion of Dean Foods’ business operations. The deal follows a comprehensive sale process and a competitive auction as part of Dean's Chapter 11 process.

Pursuant to the agreement, which is subject to final approval by the Bankruptcy Court, DFA will acquire the assets, rights, interests, and properties relating to 44 of Dean Foods' fluid and frozen facilities for $433 million.

In addition, as part of the court-supervised sale process, Dean Foods has designated Prairie Farms Dairy as the winner of the assets, rights, interests, and properties relating to eight additional facilities, two distribution branches and certain other assets for $75 million in cash. Dean Foods has designated Mana Saves McArthur, LLC, and Producers Dairy Foods as winning bidders for the sale of the facilities located in Miami, Florida, and Reno, Nevada, respectively. Harmoni, Inc. has been designated as the winning bidder for the Uncle Matt’s business.

“We ran a competitive auction process and are pleased to have reached these agreements, which we believe represent the best path forward for our stakeholders,” said Eric Beringause, President and Chief Executive Officer of Dean Foods. “Dean Foods has strong and long-standing relationships with DFA and Prairie Farms Dairy. We are pleased that through these transactions, substantially all of our processing assets will continue to operate as dairies and will be owned by our dairy farmer partners with the resources, experience and industry expertise to continue to succeed in the current market environment. We are committed to completing these transactions as quickly as possible, and to ensuring a smooth transition for our customers.”

The agreements were reached following an auction conducted under the supervision of the U.S. Bankruptcy Court for the Southern District of Texas. All agreements are subject to court approval and certain other closing conditions. A hearing to seek required court approvals is scheduled for April 3, 2020. Subject to Bankruptcy Court approval, the transactions are expected to close at the end of April 2020.

Davis Polk & Wardwell LLP and Norton Rose Fulbright are serving as legal advisors to Dean Foods. Evercore is serving as its investment banker and Alvarez & Marsal is serving as its financial adviser.

Source: Dean Foods, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset. 
3.31 kohl+COvid19.jpg

Cup half full: Part 1

With the arrival of the COVID-19 black swan, the range of emotions in today's society is analogous to an individual receiving news of a life-threatening health situation. Societal anger may be just around the corner as social distancing and isolation are becoming more of the norm throughout the U.S. and around the globe.

As the pandemic plays out, it takes me back decades to when I first arrived in Virginia for a position at Virginia Tech. Attempting to maintain my roots in farming, I rented my first farm from a neighbor named Bob. He was a modest man, a lumberjack, a farmer, and a person who had experienced world wars, depressions, assassinations, and even the Spanish flu. As I was feeding cattle and checking calves, my attention was drawn to the side road. Bob told the story of losing three brothers in three days due to the Spanish flu. Their coffins were hauled on a horse drawn wagon up that side road to the family graveyard. Bob had a temperature of 106°F; however, his fever broke just after their deaths and he lived to be 98 years of age. Evening talks with Bob always put life in the right perspective, which leads to this article. Just before my COVID-19 sabbatical, I asked a group of young farmers, “What are some of the positives or cup half-full perspectives concerning the recent challenges facing the globe?” As they shared points and perspectives, now I was in Bob's position providing them with perspective, but also hope.

One group indicated that the recent events have brought agriculture back into prominence. In many countries, the ability to meet basic needs has been taken for granted in recent decades and is now threatened. It is a good wake-up call for many individuals to know where their food is produced, processed, and the faces that make it happen. As one group stated, having a trusted source of food and getting back to the basics may be the theme for the next few years.

Another group stated that efficiency is not the only economic virtue. A sudden impact crisis requires us to rethink our priorities and well-being. For example, a large majority of our meat processing is with a few large firms. While this may be optimal for efficiency, it may hinder the resiliency of society and our ability to manage through a black swan event. Specialization and efficiency are great in economics, however diversification and resiliency in businesses, households, and society need to be considered. What will happen to the basic needs if individuals are compromised by the virus shutting down a major part of production or processing? The idea of small businesses and entrepreneurship with diversified sources of input and processing need to be examined for the economic security and well-being of the country.

I chuckle that our neighbors from the north have been criticized in recent years for the milk quota system, which results in smaller, more diverse production throughout Canada. Maybe they are onto something? As we experience vulnerability and disruption of the supply and transportation system, we need to think through different options. Perhaps some of the antitrust legislation needs to be considered in light of current events.

Next time, we will discuss more cup half-full perspectives and stories about Bob.

The opinions of Dr. David Kohl are not necessarily those of Farm Progress.

ground view of corn at sunset stevanovicigor/ThinkstockPhotos

Corn’s footprint could hit 97 million acres

USDA’s highly anticipated Prospective Plantings report, out Tuesday morning, showed bigger corn and soybean acres relative to 2019’s flood-soaked tally. Traders were already braced for some of the agency’s data, but other numbers still managed to be eye-popping. Corn futures notched moderate losses following the report, with soybeans and wheat narrowly mixed.

“The increase in corn acreage at the expense of wheat and bean ground sent the soybean-corn price ratio skyrocketing to 2.48 at last glance, indicating clear market favorability towards soybean acres ahead of planting,” according to Farm Future grain market analyst Jacquie Holland.

Mar 31 USDA - Graph 1 - SB&Corn Spread.png

USDA pegs 2020’s corn footprint at 96.990 million acres. As expected, acreage should climb 8% above 2019’s 89.7 million acres, but the agency’s assessment also topped all analyst estimates, which ranged between 92.5 million and 96.4 million acres. Farm Futures was on the high end of those guesses after conducting an exclusive grower survey earlier this spring.

A state-by-state look shows Iowa is expected to lead the way in U.S. corn acres once again this spring, with 14.1 million acres. Illinois (11.3 million), Nebraska (10.5 million), Minnesota (8.4 million) and Kansas (6.3 million) should round out the top five. Acreage is expected to rise this year in 38 of the 48 states where USDA tracks planting data.

Soybean acreage estimates were less bullish. USDA expects the total to climb from 76.1 million acres a year ago up to 83.510 million acres this spring, a net gain of around 10%. Analysts expected a larger tally, with an average guess of 84.865 million acres, including a Farm Futures contribution of 82.7 million acres.

Illinois is expected to plant more soybean acres than any other state in 2020, with an estimated 10.5 million acres. Iowa isn’t far behind, with 9.3 million acres, and Minnesota (7.4 million), North Dakota (6.6 million) and Missouri (5.8 million) should round out the top five. Twenty-two of the 29 production states could see acres hold steady or increase from a year ago.

Once again, all-wheat acres are expected to fall to an all-time low, with 44.655 million acres, sliding another 1% below last year’s tally of 45.158 million acres. Of that total, USDA projects:

  • 21.7 million acres of hard red winter wheat
  • 5.69 million acres of soft red winter wheat
  • 3.42 million acres of white winter wheat
  • 12.6 million acres of spring wheat
  • 1.29 million acres of durum wheat

USDA expects cotton acreage to hold mostly steady this year, at 13.7 million acres. That would be a less than 1% decline, if realized.

“Total acreage for corn, soybean, and wheat crops rose to 225.2 million acres, gaining 14.2 million acres back from 2019 ground that was unable to be planted due to an abnormally wet spring,” Holland notes. “Total principal crop acreage also fell back in line with trend years with a total of 319.1 million acres, more closely aligning with pre-2019 acreage estimates.”

Mar 31 USDA - Graph 2 - Corn, SB, & Wheat Acreage.png

USDA also released its quarterly stocks report Tuesday morning that showed domestic corn, soybean and wheat stocks have all fallen moderately since last December. Corn slid to 7.952 billion bushels, soybeans fell to 2.253 billion bushels, and wheat slipped to 1.412 billion bushels. Analysts were expecting a decline for all three.

Corn’s disappearance of 3.45 billion bushels during the last three months is slightly above year-over-year results of 3.32 billion bushels. Soybean disappearance of 1.00 billion bushels slipped 1% lower year-over-year. Wheat disappearance tracked 3% higher from a year ago, at 428 million bushels.

“U.S. corn inventories fell 173 million bushels lower than the average trade prediction,” Holland says. “March 1 corn stocks came in at the lowest level in four years. Increases in livestock herds may have accounted for some of the increased usage, but it is also possible that low test weights and wet corn from a soggy 2019 harvest may be catching up with the corn supply.”

Mar 31 USDA - Graph 3 - U.S. March Corn Stocks.png

This report also includes a caveat from NASS: “March 1 on-farm stocks include 2019 production from acres that were still standing and expected to be harvested when the survey was conducted in early March. The practice of including this not-yet-harvested production in grain stocks totals is standard NASS procedure. However, there were more acres than normal still standing for harvest during this survey period.”

U.S. Quarterly stocks

U.S. Prospective Plantings