Update for March 26th, 2021
Several acreage estimates have been released over the past couple of weeks just ahead of next week’s USDA announcement. Included below are a few:
Farm Futures surveyed 1,061 farmers between February 22nd- March 5th. There findings have 2021 corn acreage at 93.596 million vs 90.8 million last year and project soybean acreage at 88.51 million vs 83.1 million a year ago.
Chief economist Bill Nelson of Pro Farmer helped assemble survey results from 41 of the lower 48 states. No survey responses were received from the New England states and Nevada. He stated, “I was surprised and impressed by the consistency of central Midwest farmers in states like Iowa, Illinois, eastern Nebraska, southern Minnesota and Wisconsin – moving toward soybeans instead of corn when they decided to break from their traditional rotations. That was in contrast to almost literally every other state where the surveys netted higher corn acres, and higher soybean acres, either at the expense of other crops or especially in northern Plains, recovery of prevented planted acres. Rhetorically, were these central farmers more attuned to the soybean versus corn economics or might the derecho and late season weather of 2020 also weigh into the decisions in these states?”
Reuters surveyed several analysts regarding their expectations of next week’s USDA Acreage report next week and then averaged the findings. This poll yielded an average estimate of 93.2 million U.S. corn acres and 89.99 million soybean acres for the 2021 crop season.
USDA held their annual Ag Outlook Forum in February which gave us an early look at the agency’s 2021 acreage outlook. The projections from the meeting showed a new record for the total combined corn and soybean acreage for a single planting season with 92 million corn and 90 million soybean acres forecast. The past record was set in 2017 when combined acreage for corn and soybeans reached 180.329 million.
Corn demand remains strong particularly due to the purchase of 176 million bushels from China last week, the 2nd largest on record. This latest buying is expected push the USDA into finally raising their export forecast which will be updated in April. U.S. exporters have now sold 98.4% of the USDA’s target for the entire marketing year which runs through August. The one area of concern comes from the speed of shipments, data shows that at this time only 49% of total sales have actually left the port.
Lately we have seen a lot of uncertainty develop within the soybean market. Reports of the resurgence of African Swine Fever in China have put future sales to the nation in doubt. The rebuilding of China’s hog herd, their weakening crush margins, as well as the fresh, new supply of South American soybeans all have stressed soy prices here in the U.S. On the flipside, Washington has been discussing ways to work with the biofuels industry adding some support to the market. Next week’s report, any new export sales data or canceled shipments will be closely watched by the funds.
The USDA announced their plans this week for the new CFAP Aid along with a list of new programs that are designed to offer financial assistance to farmers, ranchers, and producers that suffered through the economic impact caused by the COVID-19 market disruptions. This newest program has allotted at least $6 billion to fund COVID-19 aid programs that will pay producers of eligible crops $20 per acre plus an additional $500 million in new funding for several other existing programs. USDA plans to re-open the sign-up for the CFAP 2 for a period of at least 60 days beginning April 5th.
For several months we have heard of the significant threat of widespread drought that exists for over 50% of the country. Varying levels of dryness stretch from the Pacific Northwest to Texas and across the High Plains and Upper Midwest. There has been some much needed precipitation across many of these regions in recent days but the outlook for a warm and dry spring is concerning.
Dry conditions began to form and intensify months ago, partially due to the La Niña weather pattern and what NOAA refers to as the “failed” 2020 summer monsoon season. The U.S. is now in the midst of the most significant spring drought since 2013 and currently covers almost 66% of the U.S. and impacts approximately 74 million people. The Associated Press noted that this is the largest mid-March drought level the country has had since 2002.
Some of the highest levels of drought conditions and otherwise overly dry conditions are located across several of the biggest crop producing states. This includes southwest Kansas and much of Oklahoma, Nebraska and South Dakota. Almost the entire state of North Dakota has reached severe to extreme drought levels. The northern part of Michigan is in a moderate drought while the northwestern corner of Iowa is now categorized in the severe to extreme drought levels. Many in the Midwest are comparing the current conditions to the drought of 2012 but it is too soon to make too many assumptions for the 2021 growing season. Even though the current drought is more widespread and more intense than during this same time-frame in 2012 we all know how quickly that all can change.
Illinois State Climatologist Jim Angel told NPR, “If this was July, we’d be hitting the panic button but in the wintertime, it’s always kind of a little odd because droughts develop slowly and you know there’s not much going on out there.” He explained that we will all know a lot more by late spring. “May is a critical month because typically we get a lot of rain…so if you don’t get it in May, then that’s your last best chance of avoiding the drought.”
The precipitation forecast for the next 7 days, which brings us into April is shown below. Notice the expansive area of below normal rainfall and below normal precipitation…