According to new quarterly crop data from the USDA, farmers planted about 92 million acres of corn this spring, a 5 million acre decrease over the agency's March acreage report. The decrease could slash this season’s corn harvest by around a billion bushels, providing some much-needed price increases for commodity farmers.
Between the coronavirus, ongoing trade conflict and some bad weather, agricultural markets have been chaotic this year. Many commodity prices have also remained paltry. The USDA initially predicted corn prices would average at $3.20 per bushel this year, a 14-year low.
Agricultural economist Scott Irwin says 2020’s “black swan” factors such as the pandemic and ongoing trade turmoil have fueled market instability for months. But he says such a drastic drop in corn acres between March and June was yet another twist.
“This was by a wide margin, the largest bullish surprise in almost the last 40 years,” he explained.
Irwin thinks bad weather may have driven farmers to plant fewer acres and file for prevented planting insurance payments. In states like North Dakota, heavy spring rain prevented many farmers from starting their seasons.
“It's just hard to imagine 5 million acres just going fallow, going forage, going into cover crops, or just not being planted to a row crop for anything.”
Todd Hubbs, who studies commodity markets at the University of Illinois, believes there is a possibility some producers planted fewer corn acres as a strategic financial move.
"If we have, that's definitely a response to these lower prices we've seen from the start of the trade war now with the demand shock associated with Coronavirus," he said.
But a smaller corn crop could ultimately offer farmers a silver lining. “We didn't need 97 million acres, and thankfully we didn't get them. If we could fade a little more, that would be very supportive for prices.”
After the USDA released the report, corn prices rose 4 percent, stoking optimism amid some analysts and farmers.
Hubbs says other core commodity crops like soybeans aligned more with predictions. "The June 1 soybean stock number came in at 1.386 billion bushels, [which is] very close to the average guess of 1.392 billion," he said. He says the acreage numbers bode well for farmers' ability to meet Phase 1 trade deal expectations between the U.S. and China, but average prices were estimated at $8.20 per bushel, a 13-year low.
"China has been buying a lot of soybeans in the 2021 marketing year," he said. "How many millions of bushels of soybeans is that mean? Is it a billion? Is it 1.1 billion is 1.2 billion? It's difficult to say."