Few corn acres switched to beans
USDA released its much-anticipated June Acreage report on Friday, June 28. Because of wet planting conditions across much of the Corn Belt, including Iowa and Illinois, many expected about 2 million fewer acres of corn would be planted than reported in the March Prospective Plantings report, with about half of those lost corn acres being switched to soybeans. Last Friday’s June Acreage report, however, indicated that largely didn’t occur. USDA estimated 97.379 million acres were planted to corn this year, which is about 97,000 acres more than in the March Prospective Plantings survey and 224,000 acres more than in 2012 (Table 1). Of the 97.379 million acres planted to corn, USDA forecasts that 89.135 million acres will be harvested for grain, in line with historical abandonment rates and acres cut for silage.
USDA estimated that 77.728 million acres will be planted to soybeans in 2013, which is almost 300,000 acres less than anticipated, but is still the largest-ever soybean acreage (Table 1). Like corn, soybean planted acres surpassed the acres reported in the March Prospective Plantings survey. USDA forecasts harvested acres of soybeans to be 76.9 million acres in 2013.
The 2013 corn acreage came as quite a bearish shock to the market on Friday, with new crop December 2013 futures closing down $0.275/bu for the day at $5.11/bu. For the week, new crop futures lost $0.4525/bu. And, even though the soybean acreage number was slightly below expectations, the record large acreage combined with spillover weakness from corn resulted in new crop November 2013 soybean futures losing $0.2325/bu on Friday. Last week’s close for November 2013 soybean futures, at $12.52/bu, was almost $0.75/bu less than the late-May high when soybean prices rallied on late planting concerns.
So, the ‘surprise’ generated by the report begs the question: “How could actual planted acres be so different than expected?” A couple factors likely led to the discrepancy. First, many of the pre-release expectations bantered about in the industry tend to be based on anecdotal evidence and examples of planting problems, etc. While important to the localized acres and farmers affected, it doesn’t have as large of an impact on national numbers as would be expected by aggregating that kind of information to the entire country. Second, although the March Prospective Plantings numbers were the best survey-based estimate of planted acres until last week’s report, forecasted profit margins available in April and May would have suggested both corn and soybean acres could be substantially higher from what farmers reported to USDA on March 1. If that indeed occurred and some acres were subsequently lost due to prevent planting or switching to soybeans, the June acreage estimates could well be close the March estimates – which they were. In fact, almost 300,000 more acres were or will be planted to principle crops in 2013 than was reported in the March Prospective Plantings report. At 325.6 million acres planted to principle crops this year, it is still about 720,000 acres less than last year’s record crop acres. Across the Corn Belt, only North Dakota, Minnesota, and Iowa planted fewer acres to principle crops than were expected to back in March. Only those three Corn Belt states, plus Illinois, planted fewer acres to principle crops than last year. Interestingly, North Dakota will still plant a record 3.9 million acres to corn this year while South Dakota will plant a record 4.8 million acres to soybeans in 2013.
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