Showing posts from April, 2019

It Still Takes Two Weeks to Plant the American Corn Crop

Most people take for granted that the farmers can plant their crops way faster today than ever before. While it is true today’s equipment can plant a single acre of corn much faster, it still takes about the same amount of time to plant the whole crop.

It’s an illusion and pretty simple math says University of Illinois Agricultural Economist Scott Irwin, "This is a situation where your eyes can deceive you. So, you drive out in the countryside and you have a friend that is a farmer. They have a big planter and can plant their individual farm, in these particular cases, clearly much faster than they used to (be able to plant them). I don’t disagree with that individual anecdotal observation. The problem is that this doesn’t necessarily add up to the whole."

Sure, the equipment can get over a single acre way faster but each piece of equipment is going over way more acres than used to be the case. Consequently, it takes about the same time to plant the whole U.S. corn crop today as it did forty-years ago says Irwin, "It is a near constant, there is some variation from year to year, but on average it looks like it takes a minimum of 14 good field days to get the U.S. corn belt planted with basically everyone able to, and willing to, run flat-out."

In 1980, for instance, Illinois farmers were able to plant about one-million acres per day. Last year, running flat-out that figure was approximately the same.

Good Yields! Yes but a Warning | an interview with Gary Schnitkey

by Gary Schnitkey, University of Illinois
read farmdocDaily article

On a national basis, corn and soybean yields were near record-breaking levels in 2018, with exceptional yields in central Illinois and the eastern United States contributing heavily to those near-record U.S. yields. Other areas had below-trend yields. The county yields for corn and soybeans presented in this article illustrate these facts. Much higher U.S. yields are possible if all areas have exceptional yields. However, all areas including Illinois should not expect above-trend yields in every year.

Corn Yields

The 2018 corn yield for the United States was 176.4 bushels per acre, just .2 bushels below the record yield of 176.6 bushels per acre set in 2017 (all yields in this article are from QuickStats, a website maintained by the National Agricultural Statistical Service). From a national standpoint, corn yields were excellent in 2018.

Contributing to these high yields were counties having average yields above 220 bushels per acre. Several of these counties were in the Northwest U.S. and Nebraska where irrigation often is used in corn production (see Figure 1). In predominately non-irrigated counties, there were a concentration of counties in eastern Iowa and extending through central Illinois with over 220 bushels per acre average yields (see Figure 1). Three counties in this region, all in Illinois, had average yields over 240 bushels per acre: Douglas County (246.0 bushels per acre), Piatt (241.8), and Warren (241.7). Eleven counties – again, all in Illinois – had average yields between 230 and 240 bushels per acre: Macon (239.9), Sangamon (236.4), Logan (236.2), Tazewell (235.4), Effingham (235.2), Coles (234.2), Stark (234.0), Moultrie (233.9), Hancock (233.9), Christian (232.9), and Mercer (231.3). Eighteen counties had yields between 220 and 230 bushels per acre: 6 counties in Iowa and 12 in Illinois.

High yields are a measure of good growing conditions, but it does not take into consideration the inherent productivity of soil. Yield deviations from trend consider an area’s productivity. For each county, a 2018 trend yield was calculated using linear regression to fit a straight line through actual county yields from 1972 to 2017. The straight line then was extended to give the 2018 trend yield which represents the expected yield given approximately average growing conditions. A yield deviation then equals the actual yield minus the trend yield. A yield deviation of 20 bushels per acre means the actual 2018 yield is 20 bushels higher than the trend yield, an indicator of a very good yield. Conversely, a –20 yield deviation indicates that the county yield is 20 bushels below the trend yield, an indicator of poor growing conditions.

As would be expected, eastern Iowa and central Illinois had yields with positive yield deviations, with many counties having yield trends above 30 bushels per acre (see Figure 2). Note that yield deviations paint a broader area of excellent yields. That area includes southern Illinois, central and southern Indiana, western Ohio, western Kentucky, and parts of central Tennessee.

Other areas did not fare as well. Counties along the Iowa-Minnesota border had below-trend yields (see Figure 2). Other regions of poor yields in include Colorado, eastern Kansas and western Missouri, Texas, Arkansas and Louisiana, North Carolina, and New York.
Soybeans Yields Similar to corn, soybeans almost had a record-breaking yield. The average U.S. soybean yield for 2018 was 51.6 bushels per acre, .3 bushels below the record yield set in 2016 of 51.9 bushels per acre.

There were many areas of exceptional soybean yields (see Figure 3). Twenty-nine counties had average county yields over 70 bushels per acre. Three of these counties were in Nebraska: Gosper (75.2 bushels per acre), Dawson (73.2), and Buffalo (70.6). The remaining 26 counties were in Illinois. Three Illinois counties had average county yields over 80 bushels per acre: Sangamon County (82.3 bushels per acre), Morgan (81.6), and Douglas (80).

Yield deviations suggest that central and southern Illinois had exceptional growing conditions in 2018 (see Figure 4). Excellent growing conditions continued into Indiana, Ohio, Kentucky, and Tennessee. Other areas did not have as productive of a year. Yields were below trend along the Iowa-Minnesota board, North and South Dakota, Nebraska, Wisconsin, Michigan, Pennsylvania, and in North and South Dakota.

Commentary The U.S. had near-record yields for corn and soybeans in 2018. Above-trend yields in central and southern Illinois, central and southern Indiana, western Ohio, Kentucky, and Tennessee where large contributors to the near-record U.S. yields.

The examination of county yields suggests two warnings. Illinois farmers should note that many several areas in the country had below-trend yields in 2018. Therefore, the 2018 experience indicates that below-trend yields are still possible. Illinois farmers should not plan on having above-trend yields in every year. It is entirely possible that the area of below-trend yields centered along the Iowa-Minnesota border in 2018 could occur in central Illinois. At the same time, Iowa and Minnesota could have above-trend yields. If that reversal occurs in 2019, there would be large, negative incomes on many Illinois farms.

Somewhat counter to the first warning, the second warning is for the possibility of much larger national corn and soybean supplies. It is possible that all areas of the U.S. have above-trend yields. That is, the western Corn Belt could have had above-trend yields at the same time the eastern Corn Belt has above-trend yields. If this occurs, national yields would be record-breaking, resulting in falling corn and soybean prices, leading to very low farm incomes.

Apr 10 | CONAB Updates Corn S&D Table

@Conab_Oficial reports Brazil's second-crop corn acreage is expected to be up 6.1% from last year. An early soybean harvest and good weather are the contributing factors. The 2nd crop corn harvest is expected to be 26.4% larger than last season's climate hampered crop.

Brazil's 2018/19 ending stocks are expected to rise to 15.3mt or approximately a 2-month supply with total yearly demand at 93.5mt. @Conab_Oficial notes new crop corn supply may yet grow as production conditions are "very positive". Exports are set at 31mt.

On price - @Conab_Oficial is concerned domestic usage will not increase because the 62.5mt already includes livestock feed usage that has levelled off and it is not known if domestic corn ethanol increases will materialize as new plants have yet to come online.

...a good part of the 1st crop corn writes @Conab_Oficial has not been marketed. When taken with a big second crop corn harvest it cautions a low price scenario.

Brazil's counterpart to USDA @Conab_Oficial notes early season conditions in the United States, should the over-abundant rainfall continue, could cause a switch to soybean acres here and a lower @CMEGroup futures price.

USDA Reports Provide Surprises for Corn

Friday’s USDA reports surprised the corn market. Todd Gleason has more on how more corn acreage than expected this year coupled with more corn leftover from last year than expected will influence prices.

by Todd Hubbs, University of Illinois
read farmdocdaily article
watch post-USDA report webinar with Todd Hubbs and Scott Irwin

The USDA’s quarterly Grain Stocks report and annual Prospective Planting report delivered surprises to the corn market. A greater than expected corn stocks number combined with higher than expected planted acreage of corn gave very bearish news to corn prices. Soybean stocks and acreage came in neutral to slightly positive for soybean prices.

March 1 corn stocks came in at 8.605 billion bushels compared to an average trade guess of 8.335 billion bushels. The stocks estimate suggested feed and residual use of corn during the first half of the 2018–19 marketing year came in eight percent lower than last marketing year. Lower feed and residual use materialized despite a sizable livestock herd and reduced production of distiller’s grains on weakening ethanol grind. A higher stocks estimate suggests the potential for underestimation of the 2018 crop size and supports the notion of declining demand for corn during the second quarter of the marketing year.

Corn producers reported intentions to plant 92.8 million acres of corn this year, 3.66 million more than planted last year. The reported corn acreage exceeded trade expectations by 1.4 million acres. The intention to increase corn acreage is widespread throughout the Corn Belt. Acreage is up 400,000 acres in Iowa, 200,000 in Illinois, and 150,000 in Indiana. Significant increases in corn acreage intentions showed up in the Northern Plains with North Dakota intending to plant 900,000 additional acres and South Dakota up 700,000 acres. Overall, the top ten corn producing states increased acreage by 2.05 million acres. If the intention to plant 92.8 million acres materializes, harvested acreage for grain may be close to 85.4 million acres. A U.S. average yield near 174.6 bushels per acre leads to a projection of production in 2019 of 14.9 billion bushels. Corn production at this level exceeds current marketing year use projections by 300,000 bushels. Corn use is expected to be higher in the 2019–20 marketing year, but the current implication of slowing use in the current marketing year and a larger crop next year is higher ending stocks.

The soybean stocks report appears neutral for soybean prices. March 1 soybean stocks estimates indicated 2.72 billion bushels, which came in above trade expectations by 33 million bushels. The stocks estimate implies seed and residual use of soybeans during the first half of the marketing year at 203 million bushels. Seed and residual use is up from last year and at the highest levels since the 2014–15 marketing year. The implications for soybean use this marketing year remain at previous levels and continue to rely on a resolution to trade issues.

Soybean planting intentions indicated farmers plan to plant 84.6 million acres of soybeans, down 4.6 million acres from last year. The soybean acreage intentions came in 1.55 million acres below of market expectations. Intentions to reduce soybean acreage spans most major production regions. In major producing states, the intention to plant fewer soybean acres is indicated by 300,000 fewer acres in Illinois, 600,000 in Iowa, and 500,000 in Minnesota. If 84.6 million acres are planted, harvested acreage could be close to 83.6 million acres. At a U.S. average yield of 49.4 bushels per acre, 2019 production projects to 4.13 billion bushels, 88 million bushels larger than current marketing year use projections. Without a significant change in soybean use over the next year, ending stocks appear set to increase slightly.

In addition to the allocation of acreage to corn and soybeans, the magnitude of total principal crop acreage shows a 4.2 million acre decrease from 2018. The USDA estimates that acreage planted to principal crops totals 315.4 million acres. The planned reduction in total planted acreage from that of a year ago showed up in feed grain crops other than corn. Sorghum acreage is projected to be 555,000 acres lower than a year ago at 5.18 million acres. Wheat acreage decreased two million acres to 45.8 million acres. Oat acreage declined by 191,000 acres. Acreage of oilseeds other than soybeans is projected to fall by 15,000 acres. Harvested acreage of hay is expected to increase by 215,000 acres.

The surprise in March 1 stocks and acreage created a bearish scenario for corn prices. The large corn stock number influences the consumption of corn in the feed and residual category directly during the current marketing year. An expectation of reduced feed and residual use is prudent moving forward. Without a resolution to the trade dispute, growth in ending stocks in both corn and soybeans appears feasible over the next year. Planting intentions confirmed the belief that farmers would switch to corn production in 2019. Depending on field conditions during the planting season and the changing price relationship between crops, the possibility of greater soybean acreage than reported in March exists. The June Acreage report will provide more clarification.