Look for December corn futures to dip in the next 30 days.
This year’s wet spring kept producers off more acres than originally anticipated, but early indications are that yield and quality are coming in better than expected on corn. Prevented plantings were higher than expected for both corn and soybeans, according to recently released numbers from USDA’s Farm Service Agency (FSA).
The 2013 prevented plantings for corn of 3.57 million acres were up from August’s estimated 3.41 million acres. The numbers are based on reports from producers who participate in FSA crop subsidy programs and who are required to submit an annual report regarding the use of all cropland on their operations.
Chat Hart, agricultural economist with the Iowa State University, estimates that between 95% and 96% of producers participate in FSA programs.
This year’s prevented soybean plantings of 1.69 million acres were up from August’s 1.62 million acres, according to FSA.
Producers enrolled in the subsidy programs also reported overall planted acreage, including failed acres, of 91.43 million acres of corn, up from August’s 88.77 million acres, and 74.66 million acres of soybeans, up from 72.06 million in August.
USDA could reduce final planted area for corn by 2 million acres or so, says Hart. "But we are still taking about a record corn crop in the mid-13-billion-bushel range," he says.
Ryan Turner, risk management consultant with INTL FCStone, Kansas City, expects USDA to cut harvested acreage by 1 million to 1.5 million acres when it releases its next World Agriculture Supply and Demand Estimates (WASDE) on October 11.
The October WASDE report will also reflect the full impact of the FSA numbers, notes Hart. While both acreage and yield play into the overall production numbers, the big question in the October report will be corn yield.
"Will yield slide? Will 162 bu. per acre come to pass in Iowa? I’m seeing a lot of variability," says Hart. "Some producers who have already harvested in central and southeastern Iowa are seeing 160- to 210-bu. yields, and test weights are decent. So far what’s come in has looked good."
Early indications across the Corn Belt are that test weights are better than expected, which will make this year’s crop easier to store, as long as lower-quality corn is not blended with higher-quality product.
"I’m hearing yield and quality are really good," says Turner. "I think prices could drift lower, take out the lows, and make new lows." Turner expects December corn futures to dip to near $4.25 per bu. sometime in the next 30 days.
When historical corn prices are used in a scatter plot along with an expected 1.8-billion-bushel carryout, it shows corn prices could fall to $3.30 per bu. "But that’s not going to happen," says Turner. "We are in a different demand environment today."