Crop outlook tainted with uncertainty

Corn and soybean plantings by U.S. farmers are sure to surge this spring, according to USDA and private analysts, but the coronavirus pandemic is creating uncertainty about whether there will be enough buyers for the bumper crops this fall. The economic slowdown is likely to reduce demand for corn ethanol, hitting corn growers in the wallet, but the alternative crop for many farmers, soybeans, faces a glut of its own.

“The past month has seen escalating concerns about the global spread of the coronavirus and increasing uncertainty about the longer-term implications for production and consumption,” said the International Grains Council, based in London, last week. “Weakening economic conditions could dampen (commodity) usage in the longer term, particularly for industrial products such as maize-based ethanol and starch.” The IGC forecast a record world grain crop in the season ahead and a 7 percent increase in global soybean production from 2019/20 production.

The USDA was scheduled to release its estimate of plantings today at noon ET, based on a survey of more than 80,000 operators during the first two weeks of March. The actual figures for crop acreage won’t be known for months. The margin of error for the estimates in the Prospective Plantings report is 2.5 percent for corn and 3.5 percent for soybeans.

Plantings of corn and soybeans, the two most widely grown crops in the nation, are certain to soar above 2019 levels if Farm Belt weather returns to normal. The rainiest spring in a quarter-century slowed fieldwork and prevented planting on millions of acres last year. Traders in Chicago expect slightly more than 94 million acres of corn and around 85 million acres of soybeans will be planted this year, compared to 89.7 million acres of corn and 76.1 million acres of soybeans last year, according to wire service surveys.

At its Outlook Forum in February, the USDA projected plantings of 94 million acres of corn and 85 million acres of soybeans, which would result in a record corn crop of 15.46 billion bushels and a soybean crop of 4.2 billion bushels, the fourth-largest on record. Traders and the USDA expect wheat acreage to hold steady and cotton plantings to drop by 1 million acres or more.

With a mammoth crop, the corn stockpile would stand at a burdensome 2.64 billion bushels when the 2021 crop was ready to harvest, the largest “carry-over” since 4.26 billion bushels in 1988. Soybean stocks also are large but would shrink by one-fourth if exports return, as USDA projects, to rates seen before the Sino-U.S. trade war.

“The coronavirus is having profound impacts on the U.S. economy,” wrote economists Scott Irwin and Todd Hubbs of the University of Illinois. With gasoline consumption falling due to stay-at-home orders for many Americans, corn-for-ethanol use could fall by 256 million bushels for March-May, “an amount that would materially increase corn ending stocks for the 2019/20 marketing year,” they said at the farmdoc Daily blog. At present, stocks are estimated for 1.89 billion bushels.

Typically, from 35-40 percent of each corn crop is used to make ethanol.

“Assuming a rebound in U.S. acreage, world (soybean) output in 2020/21 is predicted to expand by 7 percent, year-on-year,” said the IGC. Consumption was forecast to rise modestly along with carryover stocks, although stocks would be lower than their recent average. In its forecast of record grain production, the IGC said corn production would rise by 4 percent and wheat output would be the largest ever.