Joe Victor is a Business Development Specialist with Minneapolis Grain Exchange, Inc., where he monitors cash grain activity and cash grain opportunities. He provides marketing advice through this blog.
Acreage Adjustment, 2009
Jun 18, 2009
Since the year 2000, there has only been two of seven years when the June “Planted Acreage” report has found fewer acres planted than the March “Prospective Plantings” report has estimated. The two years observed were 2001 and 2002. From the March to June reports, in 2001, corn acres planted were down 584,000 while in 2002, acres slipped by 100,000. As the corn industry prepares for the June 2009 Planted Acres report the trade is bantering about corn acres to be reduced by 1-3 million. Those in the million acre camp are suggesting fewer acres planted in Illinois, Indiana as well as Missouri making up the lions share of reduced corn plantings and offset to a degree by increased acres planted in the states of Nebraska, Iowa and Minnesota where near ideal soil conditions and reduction in fertilizer prices were the two main incentives. Those in the 3 million camp suggest delayed plantings combined with unattractive nitrogen prices and unapproachable saturated soils, leading to prevented planted insurance claims as the main reasons for such an adjustment. Allendale needs to point out, dating back to 2000, the single largest March to June corn acreage adjustment was 2.434 million more in June of 2007.
This much is known, via the last corn planting progress report issued by the National Agriculture Statistics Service, of the main 18 corn belt states of the 78.12 million acres intended to be planted, 97% of the acres were reported to have been complete. Those states with the notable 5% or greater of prospective acres not planted as of June 8 are Illinois, Indiana, Missouri, and Pennsylvania while six states managed to have 100% of its acres planted. As you are able to discern from the immediate demographics (view chart)
, of mainly east corn belt states behind a normal pace of planting, this could ultimately have an impact on traditional new crop corn futures, basis and impact regional grain companies as they may have to bid up for supplies.
Allendale Inc research forewarns as a result of its own “planting pace” and “futures price” relationship between corn and soybeans research, (request Allendale acreage study graphics)
it is not in the 1-3 million acreage reduction camp as it is scheduled to release its official estimate on June 18th
along with its quarterly stocks estimate.
With regards to a soybean acreage adjustment, even though the masses may automatically assume any reduction in corn acres will find its way to increased soybean acres, but may want to consider the following. In 2001 when corn acres adjusted downward by 584,000, soybean acres decreased by 1.3 million acres and in 2002, while corn acres fell by 100,000 from the March to June reports, soybean acres were left unchanged. As of June 14, severe plantings delays are apparent in IL, IN, MO, AR, TN and KY which may limit initial March “Prospective Plantings”.
What are your thoughts on potential acreage for corn and soybeans for 2009?..........Joe Victor
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