The U.S. Department of Agriculture’s March 1 Prospective Plantings Report was surprisingly bullish for corn and soybeans.
U.S. farmers indicated they intend to increase corn acres only 1% from 2020 to an estimated 91.1 million acres. That is only 325,000 acres higher than last year and was around 2 million acres below the average trade guess. The lower corn plantings may be somewhat a function of higher fertilizer prices, which have risen from 25% to 30% since fall.
However, there were expectations some of the 3 million acres of prevented planting in North Dakota and 1.7 million acres in South Dakota might be planted back to corn, so that added to the surprise. Randy Martinson of Martinson Ag Risk Management said North Dakota's corn acreage increased 69% versus last year and South Dakota was up 13%. With higher competing prices, acres were also shifted to other crops such as sunflowers, canola and sorghum. Sorghum acreage was above estimates and nearly 1.12 million acres above last year at 6.94 million acres.
Corn stocks in all positions on March 1, 2021, totaled 7.70 billion bushels, down 3% from March 1, 2020, or 251 million bushels. This was in line with expectations. Of the total stocks, 4.04 billion bushels were stored on farms, down 9% from a year earlier. Off-farm stocks, at 3.66 billion bushels, are up 5% from a year ago. The December 2020 to February 2021 indicated disappearance is 3.59 billion bushels, compared with 3.38 billion bushels during the same period last year.
With the big corn acreage surprise, market analyst John Heinberg with Total Farm Marketing is optimistic about the upside in corn.
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“I think we need to be above $6 on old crop corn and above $5 on new crop,” he said.
Soybean planted area for 2021 was also a bullish surprise, estimated at 87.6 million acres, up 5% from last year. However, this is nearly 2.4 million acres below the average trade guess of 89.99 million acres. It’s also below the estimate USDA released at the February Ag Outlook Forum.
“USDA’s 90-million-acre figure put soybean ending stocks right at 145 million bushels, so with the nearly 2.5 million acre drop, that could put new crop carryout down to as low as 100 million bushels, which is below pipeline supplies,” Heinberg said.
This leaves no room for error during the upcoming growing season.
Quarterly stocks for soybeans on March 1, 2021, totaled 1.56 billion bushels, down 31% from March 1, 2020. However, this was in line with pre-report estimates. Soybean stocks stored on farms are estimated at 594 million bushels, down 41% from a year ago. Off-farm stocks, at 970 million bushels, are down 22% from last March. Indicated disappearance for the December 2020 to February 2021 quarter totaled 1.38 billion bushels, up 39% from the same period a year earlier.
Heinberg said this means ending stocks will need to be adjusted by USDA in the April World Agricultural Supply and Demand Estimates report and could be below pipeline supplies. He said this equates to higher soybean prices.
“The market needs to do more work to ration demand, and so it is possible old crop soybeans may have to go as high as $16 to do that, which will also pull up new crop soybean prices,” he said.
All wheat planted area for 2021 is estimated at 46.4 million acres, up 5% from 2020. This represents the fourth-lowest all wheat planted area since records began in 1919. The 2021 winter wheat planted area is up 9% from last year at 33.1 million acres. Of this total, about 23.2 million acres are hard red winter, 6.42 million acres are soft red winter, and 3.48 million acres are white winter. The area expected to be planted to other spring wheat for 2021 is estimated at 11.74 million acres, down 4% from 2020. Of this total, about 10.9 million acres are hard red spring wheat. Durum planted area for 2021 is expected to total 1.54 million acres, down 9% from the previous year.
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Quarterly stocks for wheat on March 1, 2021, totaled 1.31 billion bushels, down 7% from 2020. On-farm stocks are estimated at 284 million bushels, down 16% from last March. Off-farm stocks, at 1.03 billion bushels, are down 4% from a year ago. Durum wheat stocks totaled 42.7 million bushels, down 17% from 2020.
Wheat will get some price support from corn and soybeans, but with improved crop conditions in the U.S. and globally, Heinberg said it will be difficult for prices to push much higher. The exception to that rule may be hard red spring wheat.
