John Baize, an Economist and Market Consultant for the U.S. Soybean Export Council said the news won’t bring an increased incentive to plant soybeans, especially in areas with delayed plantings.
Baize said, “[Farmers will think] what can I plant which will qualify for the payment, cost me the least and I can get the crop mature before the frost in the fall? The last thing we want to do is encourage farmers to plant too many soybeans. That’s the last thing we need is more soybeans, particularly when we have an on-going trade dispute with China.”
USDA’s latest Crop Progress report shows 49 percent of corn has been planted in the top producing states, compared to the 5-year-average of 80 percent. For soybeans, 19 percent of soybeans are in the ground, compared to the 5-year-average of 47 percent. The lag may be too late for some farmers who now consider putting acreage into prevented plant. Now, the question remains if they will try to plant and take an MFP payment or stick with prevent plant on acres they are unable to plant.
“In certain cases, those payments [with corn acres] are close to $300 an acre,” said Baize. “If you plant some other crop, you have the risk with weather and what it’s going to be like the rest of the summer. If you have the prevent plant payment, [you have that money in the bank] you don’t have to do anything else on that land this year and you know you’re going to get that money.”
Some analysts say farmers may plant corn more aggressively because of the payment being the same for both corn and soybeans.
“The talks of 10 to 12 million prevent plant acres for corn and soybeans. That may be overstated at this point. [That’s due to the promise] of getting a payment on planted acres, that by itself may be more encouraging for acres,” said Ted Seifried, Vice President and Chief Market Strategist with Zaner Ag Hedge “If I’m looking at the payments being the same for corn and soybeans, it’s a lot more attractive to plant corn after the rally we just had.”
USDA says it will continue to release more details.