Corn market: US analysts call for 93-94mln acres for planting
Fastmarkets AgriCensus editorial director Tim Worledge explores the current outlook and direction ahead for the US corn market.
Expectations that the United States Department of Agriculture (USDA) could push the domestic planted area for corn higher when it releases the acreage report on Wednesday June 30 have underpinned some of the recent falls on 2021-22 corn futures, with investors factoring in the impact of high prices in expanding farmers’ planting intentions.
The figure will be key in determining the volatility and direction ahead for corn, with many analysts now expecting the recent high prices to ensure US farmers will have maximized their plantings to the highest degree possible.
Futures have retreated from recent multi-year highs, with the publication of some forecasts calling for corn planting to occupy 96.5 million acres. This fosters expectations of a huge harvest ahead – augmented by the USDA currently predicting a record-breaking 179-bushel-per-acre yield.
But the current outlook – 91.1 million acres – reflects the limitations that could still pare back those expectations. High prices in soybeans and strong Chinese demand for wheat and sorghum mean farmers have little capacity to maximize one over the other.
Analysts and trade sources spoken to by AgriCensus anticipate an increase at the upcoming July revision of the influential Wasde report. The report factors in the June 30 planting update, but not by the delta that some have predicted, with one entity calling for a 6.00% increase in corn planting to take it to 96.5 million acres.
The difference could be critical in appraising the prospects for corn in the new marketing year, with the huge area and record yields potentially boosting best-case production to just under 16 billion bushels (405 million tonnes).
On the ground, analysts and farm representatives agree on an increased area, but most stop short of such seismic increases.
“I would not be surprised to see an upward revision in the June report,” an Illinois corn farming source said.
“Anecdotally, during a recent meeting we discussed acreage and the feedback we got from farmers was that they think there may be the same to slightly more corn acres than last year,” the source said.
Illinois is the second-biggest corn-producing state in the US, planting 11.3 million acres last year versus a March 2021 forecast for 10.9 million acres, amounting to a 3.50% difference.
If replicated across the current planting figure, that would bring corn to 93.8 million acres, with other analysts broadly in agreement.
93 million acres
“Some say as much as another 5 million corn acres, but that seems like a reach. [I would expect] maybe closer to 1.5 million to 2 million acres additional,” according to Diana Klemme, of Atlanta-based brokerage Grain Service Corp, giving a figure in line with others.
“I’m in the 93-93.4 million-acre range in corn and 88 million acres in beans,” Midland Research’s Jerry Gidel told AgriCensus, citing the strong interest in wheat and sorghum limiting the increased planted area in corn.
“The high costs and the weather also limited corn’s increase,” he said, referring to the dry conditions that could yet play a decisive role while this harvest unfolds.
With some sources drawing links between this year’s harvest and the 2012-13 harvest that was afflicted by drought, the dry conditions could further reduce the yield and widen the difference between the planted and harvested estimates.
That will have a serious impact, with yields in 2012-13 declining by nearly 18.00% versus the previous two seasons and the difference between planted area and harvested area widening from 7.4 million acres to nearly 10 million.
While no one is suggesting the dry conditions will reach the severity of 2012-13, the figures are useful in building one production scenario.
Assuming planting is increased in line with analysts’ expectations, to around 93.4 million acres, the harvested area could ultimately land in the region of 85.4 million acres.
Currently, the USDA is looking for the harvested area to come in 7.6 million acres below the planted area, but that could increase if dry conditions persist - a potential outcome given credence by another decline in overnight corn conditions.
If yields were also reduced by 8.00% due to drought conditions in some of the major producing states, the current projection could fall to around 165 bushels per acre, yielding production of 14.1 billion bushels.
With beginning stocks unlikely to see much uptick from the current 1.1-billion-bushel outlook, supply rises to 15.2 billion bushels.
With US use still coming in at 14.76 billion bushels, assumptions around the huge 62.2-million-tonne export program will have to be pared back sharply in order to prevent a dramatic squeeze on 2021-22 ending stocks.
This article, by Tim Worledge, was first published to agricensus.com on June 22.