Spring Planting Preview: Lots of Uncertainty, But Little Change Expected in I-States

 
Spring Planting Preview: Lots of Uncertainty, But Little Change Expected in I-States

In some states, spring planting requires choosing from a variety of crops, including cotton, sorghum, wheat, rice, corn, hay, soybeans and more. In the rich soil of Iowa, Indiana, and Illinois, the decision usually comes down to just corn or soybeans.

But it doesn’t necessarily make the choice any easier for farmers, especially with this spring’s bearish commodity prices for both corn and soybeans. “Which do we plant to lose the least money?” asks Farm Journal Economist Bob Utterback of Utterback Marketing, who says a greater share of farmers (15% to 20%) than normal this spring have still not finalized their planting decisions.  

“There’s just a lot of uncertainty out there in both corn and soybeans,” agrees Michael Langemeier, associate director of Purdue University’s Center for Commercial Agriculture.

The recent volatility in the grain and soy complex carries part of the blame. “The markets have fluctuated an ungodly amount in the past 90 days,” says Mark Johnson, an Extension field agronomist with Iowa State University. He says his farmers have been equally reluctant to commit to this year’s crop.

And, with the market waiting for the March 31 Prospective Plantings and quarterly grain stocks numbers, the roller coaster ride is likely to continue for a little longer. “There are two or three things still unknown as farmers finalize their planting decisions,” says Darrel Good, professor emeritus at the University of Illinois.  Those unknowns include the weather of course, but also price expectations and the relative profitability of corn vs. soybeans on their own farm. “It’s the price piece that keeps changing,” he says.

With margins so tight, finances are another factor in this spring’s planting decisions.  With a cash price of $3.50 for new crop corn, “you better be pinching your pennies pretty tight,” says Johnson. “You better not be doing any more tillage than necessary. You better not be putting on any more fertilizer than necessary, and you better not be using traited corn.”

Those upfront costs can be a concern for growers and their lenders.  “Depending on their cash flow position, farmers may be forced into planting soybeans by their banker,” Johnson notes.

Despite all the indecision, though, any overall acreage changes are likely to minimal in the I-States, where corn and soybean rotations already dominate.

In 2014, Iowa and Illinois were the nation’s top growers of corn and soybeans, planting a total of 25.6 million acres of corn and 19.7 million acres of soybeans between them, according to USDA data.

“We have a large core of producers who are 50 percent corn, 50 percent soybeans and would only change [crops] under extreme circumstances,” says Good. “Only at the margins will we move from corn to soybeans.”

In Indiana, where farmers planted 6 million acres of corn and 5.5 million acres of soybeans in 2015, acreage changes are also expected to be minimal. “We’re not going to see large shifts,” Langemeier predicts. With so much uncertainty in the markets, “you’re better off sticking with what you know.”

Any changes that Indiana farmers do make will likely result in more soybean acres. “Last year, we increased soybeans at the expense of corn,” Langemeier says. “We expect that to continue.”

He and others have also noted a growing interest in non-GMO corn and soybean varieties For some farmers, the decision is monetary, according to Johnson. After all, traited corn is much more expensive than non-traited, which may not make sense given $3.50 corn. For other producers, it represents a business niche as local livestock producers seek out local, non-GMO feed for their animals. "I think there's going to be an increase in the demand for non-GMO corn and soybeans," says Langemeier. While the numbers are small compared to conventional crops, "we do see a trend in that direction." 

So far, weather or moisture doesn’t appear to be a worry in any of these key states. While the temperatures—and the soil—are still cold, crop experts sound pretty optimistic about the planting season ahead.

“It’s shaping up now that the snow is all gone,” says Johnson, who remembers last year digging down to the roots in June to discover exceedingly cold soil, but thinks Iowa might have a nice April this year. “In two to three weeks, the soil could be in great shape.”

 

Spring Planting 2015: I-States

States: Iowa, Illinois, Indiana

Top Contender: Corn

Sleepers: Non-GMO varieties of corn and soybeans

Factors to Watch:  Corn and soybean price moves, which could push farmers on the fence toward one crop or the other.

What will you plant this spring? Share your thoughts on the AgWeb discussion boards.

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Comments

 
Spell Check

Don
Shedd, OR
3/30/2015 09:43 AM
 

  I knowit is not what msot Midwest farmers think but what a good year to take the poorest producing fields and plant an annual summer cover corp. In three years they would have as much net profit.

 
 
Larry McKown
Clayton, MI
3/30/2015 06:48 AM
 

  Skimping on fertilizer, not planting traited corn, basically trying to save your way to profit is a recipe for disaster. Instead look at input components as an investment and make decisions based on ROI. Traited corn and fertilizer have delivered some of the best ROI historically. Each farm, each field is unique, managing each acre to its fullest potential is probably a better plan.

 
 
BobW
Anywherebut, DC
3/30/2015 12:33 PM
 

  It is important that farmers signal to the seed, fertilizer, and other input companies that they won't pay the high input costs to grow below cost. If the majority plant non-trait, hold back on fertilizer, and in other ways cut back on inputs it will send the needed signal, so that next year the input costs finally decrease. Maybe by this fall even. And with the somewhat lower yields, the crop prices will then go up higher than they would have been, adding profit back into the equation.

 
 

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