Deterred by trade war, the pandemic, and a bit of bad weather, U.S. farmers effectively chopped 1 billion bushels out of this year’s corn crop by planting far less of the crop than they had planned in early spring, USDA data indicated on Tuesday. “This was a huge acreage shock,” the biggest decline for corn intentions in nearly 40 years, said economist Scott Irwin, who pointed to the extraordinary economic volatility created by the coronavirus.
Instead of the first-ever 16 billion-bushel crop, growers will harvest a more manageable 15 billion bushels of corn, assuming yields match USDA projections. It would be the second-largest corn crop on record but the corn stockpile would be half-a-billion bushels smaller than earlier feared and the farm-gate price for this year’s crop would average $3.40 a bushel, 20 cents higher than forecast by USDA, said Irwin and Todd Hubbs, both of the University of Illinois.
Growers seeded 92 million acres of corn and 83.8 million acres of soybeans, according to a USDA survey of 70,900 farmers in early June. Corn plantings were down by 5 million acres from USDA’s March survey. Soybeans usually are the Farm Belt alternative to corn but soy acreage was only 300,000 acres larger than March intentions, a much smaller rise than traders expected.
Corn and soybeans are the two most widely grown crops in the country and account from more than half of the land planted to the two dozen “principal” crops, from feed grains and cotton to millet, potatoes and chickpeas. Much of the 5 million acres that dropped out of corn probably will be reported later as “prevent plant” land where floods, spring rains or late harvests kept farmers out of the field, said analysts.
“Part of that can be blamed on low prices and in some cases, on weather/flooding issues,” said Pat Westhoff, director of the FAPRI think tank at the University of Missouri. In addition, crop land in North Dakota is 2 million acres smaller than in 2018. A rainy spring disrupted planting throughout the Farm Belt in 2019 and early winter storms prolonged the fall harvest into this spring in parts of the upper Midwest and northern Plains.
With growers holding the line on soybean production, this year’s crop would sell for an average $8.45 a bushel, said Irwin and Hubbs during a webinar, compared to USDA estimates of $8.20. The crop would total 2.13 to 2.15 billion bushels, the fourth-largest on record, but the US stockpile would continue to decline after reaching a record 909 million bushels in August 2019.
“We didn’t need 97 million acres” of corn, said Hubbs, referring to repeated warnings of price-depressing stockpiles if farmers followed their March plans for a dramatic expansion of corn plantings following 2019’s weather delays.
Demand for corn ethanol plummeted this spring as stay-at-home orders and the economic slowdown that accompanied the coronavirus slashed gasoline consumption. The USDA estimates 4.9 billion bushels of the 2019 corn crop will be used in making ethanol, a drop of nearly 450 million bushels from the 2018 crop. Corn-for-ethanol is forecast to recover to 5.2 billion bushels of this year’s crop.
The USDA forecast of a season-average price of $3.20 a bushel for this year’s corn crop would be the lowest in 14 years. At $8.20 a bushel, the estimated season-average soybean price would be the lowest in 13 years.
Crop and livestock revenue is forecast to drop by $20 billion this year due to the low prices from the trade war and the pandemic. The USDA has disbursed nearly $4.9 billion in aid to producers from a $16 billion coronavirus relief fund.
In the quarterly Grain Stocks report also released on Wednesday, the USDA said the corn stockpile was nearly the same size as a year ago at 5.22 billion bushels, some 273 million bushels larger than traders expected. Soybean stocks of 1.37 billion bushels and wheat stocks of 1.04 billion bushels were in line with expectations.