Like many farmers, Bruce Baer envisioned acre upon acre of corn across his land in northwest Ohio. But as a wet, cold spring dragged on, he’s been forced to reconsider his plans.
Baer has managed to seed less than a fourth of the 650 acres he intended to plant to corn as soggy conditions stalled fieldwork. Fearing it’s too late to plant corn and expect a decent harvest, Baer said he's switching unseeded ground to soybeans, which have a shorter growing season. His situation is typical of many farmers in the region, he says.
“There's very little that has been done” in Ohio’s corn ground, Baer said May 26. He raises crops and cattle near Van Wert, about 10 miles east of the Indiana border. “It's possible a lot of corn won't be planted. Most guys will probably go to beans.”
Corn prices near $7 a bushel were expected to offer plenty of incentive for farmers to plant as much of the crop as they could, but Mother Nature has not cooperated. The experiences of Baer and other farmers are fostering growing concern as corn futures hover near all-time highs and U.S. stockpiles of the grain head toward a 15-year low.
The prospect that a few million Midwest acres will be shifted to soybeans will make a tight corn supply outlook even tighter, analysts say, and it appears unlikely U.S. farmers will reach the government’s lofty plantings target.
“It’s pretty obvious we’ll be tighter” on corn supplies, Bob Young, an economist with the American Farm Bureau Federation, said in an e-mail.
As yield potential declines, livestock concerns amplify
This delayed planting comes at an inopportune time for livestock producers, who are counting on favorable weather and a big crop to replenish grain inventories and provide some relief from soaring feed costs. So far, it’s far from clear whether that will happen, and the grain markets have displayed heightened uncertainty over the crop outlook.
In trading May 27, corn futures for December delivery, which reflect expectations for the upcoming harvest, rose 7 ¾ cents to $6.84 a bushel, a record-high settlement for the contract. December futures are up 9.1 percent over the past two weeks and up 22 percent this year.
“The whole corn crop is late,” Archer Financial Services analyst Dennis Smith said in a May 27 report. “What is not clear is how many acres will be left unplanted, as the calendar rolls into June.” Corn still not planted will be “extremely late,” Smith said.
Yield prospects for Midwest corn typically diminish after early May, and late-planted crops are also vulnerable to early September or October freezes that bring the growing season to an end. According to University of Illinois economist Emerson Nafziger, potential corn yields decline by more than a bushel for every day planting is delayed into the last third of May or later.
In Ohio, the No. 8 corn-producing state, just 11 percent of the crop was planted as of May 22, according to the U.S. Department of Agriculture. Normally, Ohio farmers have 80 percent of their corn seeded by that time of year, based on the five-year average.
Indiana and other states to the west were faring better thanks to some drier weather over the past couple of weeks. The crop in Iowa, the top corn producer, was almost 100 percent planted, while Illinois farmers were 90 percent finished.
Dialing down corn acreage expectations
Still, about 6.3 million acres combined in Indiana and Ohio, or two-thirds of the states’ projected corn acreage, wasn’t seeded at the start of the week, based on USDA numbers. The two states last year produced 1.43 billion bushels of corn, or 11 percent of the total crop.
Much of that as-yet unseeded ground likely will end up in soybeans, said Mike Zuzolo, who runs Global Commodity Analytics & Consulting in Lafayette, Ind. Commercial grain buyers in the region “seem to have come to a realization that the corn crop will likely be short,” Zuzolo said.
Nationwide corn plantings this year may be as low as 89.7 million acres, Zuzolo estimated. That compares to the USDA’s projection, released March 31, for 92.2 million acres, which would be up 4.5 percent from 2010 and the second-highest total since the end of World War II.
Other analysts peg corn plantings at 90 million to 91 million acres, though those levels may still make it difficult to achieve the record 13.51 billion-bushel harvest the USDA currently forecasts.
Another factor in the acreage outlook is the insurance many farmers bought earlier in the year to protect from adverse weather that harms crops.
After certain points in early June, the potential insurance payout for planting corn diminishes with each passing day. For some farmers, that means it may make more financial sense to not plant at all, opting for a payout from the insurance company instead.
These “prevented planting” payments may be higher than the expected returns from actually planting corn or soybeans, University of Illinois economist Gary Schnitkey wrote in a May 24 report.
Amid record rainfall, farmer frustrations grow
Still, although insurance payments may lead to some acres being taken out of corn production, there is still some time left to plant before the insurance deadlines, Schnitkey said.
“A great deal of planting can occur before the final planting date is reached,” Schnitkey said. “Therefore, it is quite possible that most acres planed for corn will end up being planted to corn.”
In northwest Ohio, Baer, the Van Wert farmer, continues to wait for sunnier, warmer days. During April, statewide rainfall averaged a record 7.7 inches, more than double the 3.58 inches the state normally receives that month, according to the Ohio Department of Natural Resources. For this month through May 24, Ohio rainfall averaged 5.12 inches, 71 percent above normal.
“It's been one to two days of sun then four to five days of rain,” Baer said. “Pretty much all of Ohio is in the same boat. It's pretty frustrating.”