The wettest spring in a quarter-century may lead to the largest crop insurance payout since 2000 to farmers unable to plant corn and soybeans, said a university economist. He spoke ahead of a USDA report today that will project the impact of a cold and rainy spring on this fall’s harvest. Analysts expect a sharp decline in the size of the soybean crop and a small reduction for corn.
Corn and soybeans are the most widely planted crops in the country, accounting for more than half — 55 percent — of the 309 million acres sown to the 20 “principal crops” of the United States. Farmers told the USDA in June that they had planted slightly less corn and far fewer soybeans than they had intended at the start of the planting season.
Prevented-planting indemnities could total $3.6 billion for corn and soybeans this year, estimated University of Illinois economist Gary Schnitkey at the farmdoc daily blog, if 8 million acres of corn and 3 million acres of soybeans are idled because of wet spring weather. There is vigorous debate in the farm sector over the acreage total for prevented planting and how the major crops have been affected. Agriculture Undersecretary Bill Northey has said that more than 10 million acres are affected and that payments could top $1 billion.
On average, 4.1 million acres a year are reported as prevented-planting for all U.S. crops, and payments average $670 million annually, said Schnitkey.
The USDA will incorporate data from its Acreage report, issued on June 28, into its monthly World Agricultural Supply and Demand Estimates (WASDE) report, which projects crop output, prices, and consumption. Traditionally, the USDA uses the estimates of planted and harvested area for corn and soybeans from the Acreage report in the July WASDE to calculate production based on normal weather and yields. The result is preliminary considering that crops will not mature for weeks to come.
The August crop report is often called the most important crop report of the year because it is the first that is based on USDA spot checks of fields and a survey of thousands of growers.
In a survey by Bloomberg, traders said they believed less corn was planted than the 91.7 million acres and more soybeans were planted than the 80 million acres that the USDA reported on June 28. The traders pegged the corn crop at 13.6 billion bushels and soybeans at 3.9 billion bushels. They said yields will be lower than the USDA projected in June because late-planted crops are not as productive as those planted on time. U.S. stockpiles, plump from a string of bumper harvests, would shrink in the year ahead and improve lackluster market prices in the future.
The eight major crops — corn, sorghum, barley, oats, wheat, rice, cotton, and soybeans — will account for the bulk of U.S. crop plantings this year, at 244 million acres. That would be down by 9.8 million acres from last year — an unusually large decline — with soybeans accounting for 9.2 million acres of the drop. Soybean plantings would be the smallest in six years.