The much-anticipated “Prospective Plantings” report from USDA last week indicates corn growers intend to plant 85 million acres of corn for all purposes in 2009, down 1% from last year. The report cites lower corn prices and unstable input costs for discouraging some growers from planting corn. If realized, this will be the second consecutive year-over-year decrease since 2007 but will still be the third largest acreage since 1949, behind 2007 and 2008.
Expected acreage is down from last year in many states. However, producers in the 10 major corn-producing states (Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin) collectively intend to plant 66.3 million acres, up slightly from the 66.1 million acres planted last year.
Between the near-record crop and demand being hammered by the global recession, plenty of doomsayers predict cash corn prices will slide below $2.50/bu. Anything’s possible, but the futures market hasn’t reflected such concern so far. Given global demand dynamics and the vagaries of Mother Nature, it still seems like there’s lots more upside potential than down.
Meanwhile, soybean producers intend to plant 76 million acres, up slightly from last year. And all wheat acres are projected at 58.6 million acres, down 7% from last year.
Darrell Mark, University of Nebraska ag economist, noted in last week’s In the Cattle Markets newsletter that there’s still a sizeable chunk of acres unaccounted for in the USDA report, when you account for year-to-year increases and decreases in planting intentions.
“…total planted acreage is reported down 7.8 million acres from last year. The question is, what happened to these acres and what will they be planted to?” Mark wonders. “I think it’s safe to say the housing industry hasn’t been good enough this past winter for urban encroachment to have taken over nearly 8 million acres. Thus, there still may be room for acreage increases in some major crops – producers haven’t revealed all their acreage decisions yet. And, although some acreage decisions were made last summer and fall, undecided acres have responded to dramatically changing incentives in the past several months, including this past month since the data in the report were collected. It’s likely the incentive to grow corn vs. soybeans will continue to change for the next month until planting.”