Update for March 25th, 2022
Spring has arrived and next Thursday, March 31st the USDA will release their annual Planting Intentions report. This season all commodities are rallying in the hope to gain more acres, given corn and soybean acres were around 180 million combined during 2021, we think the high prices can keep total acres close to or over that same amount” said Matt Bennett cofounder of AgMarket.Net. AgMarket.Net looks for the total number of soybean and corn acres to be nearly even in 2022 due to incredibly high fertilizer costs and excellent soybean prices. “However, we feel corn acres will remain higher than soybean acres due to such a strong spring insurance price. Plus, December corn is trading well above the $5.90 spring average as we approach planting.” The company also expects wheat acres will increase by more than 2 million acres this season.
Pro Farmer/Doane conducted a planting intentions survey. Data received indicated a reduction is expected in corn acres while soybean acres are projected to increase. Surprisingly the results also show a decrease of 900,000 acres in the combined total of corn and soybean acres planted this season compared to the 179.7 million acres planted in 2021. These adjustments are expected to mostly effect acres in the northern tier of states in the Corn Belt; Minnesota, North Dakota, Wisconsin and Michigan where spring wheat is expected to win over some of those acres. The Delta region is also forecast to lose some corn and soybean acres to cotton in 2022.
The Food and Agricultural Policy Research Institute (FAPRI) located at the University of Missouri follows trends in the agriculture industry. Based on their data they expect the average acreage planted to each of the major crops in the U.S. will remain mostly steady over the next decade. But they also noted that the outlook for acreage is “unusually uncertain in 2022”.
Global food security has become an increasing concern over the past couple of years. Drought in SAM and the U.S. has reduced supplies of major commodities. Now we add to the equation the war in Ukraine which has crippled one of the worlds chief crop producing regions. Seven U.S. Farm Groups sent a letter this week to U.S. Secretary of Agriculture Tom Vilsack asking that the USDA permit farmers to plant on the more than 4 million acres of “prime farmland” that is currently enrolled in the CRP and do so without any penalties. The seven farm groups asking for this included: feed producers, grain exporters, millers, bakers and oilseed processors. They wrote, “It remains unclear whether Ukrainian farmers will be able to safely plant crops this spring. Time is of the essence. The planting window in the United States has already opened.” Many farmers are skeptical of the idea because generally acres that are set aside into the CRP are not high yielding acres or they have been found to be environmentally sensitive. These groups are arguing though that if these acres were to be planted and produced at the 2021 average corn yield, it could mean an additional 18.7 million metric tons of grain produced. Remember though, these are not high yielding acres and they would be asking farmers to invest and put at risk, large sums of cash for in-season inputs for very uncertain results. The USDA-FSA has stated they have no immediate plans to relax current CRP rules but Vilsack has not ruled out the possibility. (Reuters)
*The European Union has already taken steps to ease restrictions on their idle acres, offering farmers financial incentives to plant them this season.
At a meeting this week the European Commission accused Russia of deliberately targeting Ukrainian agriculture with the intention to cause a food shortage and ultimately a widespread famine in the nation. Valdis Dombrovskis, vice president of the Commission said, “I would point out that Russia appears to be deliberately targeting and destroying Ukraine’s food stocks and food storages.”
Ukrainian Ag Minister Roman Leshchenko told Reuters that it is possible that planted acres may be reduced by 50% this year. Last year farmers in Ukraine planted 15 million hectares but this year may only be able to plant 7.
Arlan Suderman of StoneXGroup cautions that global supplies were already getting tight before the war started. “Because of other dynamics, we were already tightening up the balance sheet. If you take all the world’s supply of corn, you take China off of it, because we believe USDA is overstating Chinese corn supplies by 49 metric tons, and you take the United States off, what’s the situation in the rest of the world? Well, according to USDA data, it’s about 34 days of supply, which is the tightest in 20 years. So, there wasn’t any room or margin before.”
Suderman has spent time visiting with some Ukrainian customers and has found that while they are being as resilient as possible, they have very little incentive to get into the field. “The winter wheat looks good where the tanks haven’t gone over it. About 50% of the fertilizer was in place prior to this happening. Some of that got applied top dress in the western part of the country prior to the war breaking out, then everything came to a halt and now they wonder if that’ll even get harvested.”
Ukraine recently became an exporter of corn and soybeans. For centuries prior to that it was considered the breadbasket of Europe due to their large grain production. Ukraine possesses 2/3rds of the richest soils found in continental Europe. Chip Nellinger of Blue-Reef Agri-Marketing says that the reality of the situation is that the damage already done to the infrastructure will make it very difficult for farmers to find needed inputs and fuel. Nellinger added, “They're essentially on the same growing season as the ‘I States’ along the I-80 corridor. If you think about it, we don't like planting corn much past the first week or so June, that's less than 90 days away. And you have to question at this point is that even possible? Putin is not pulling out of there, they may stop bombing, but he didn't go into Ukraine for the idea of pulling back out in a month. So, he's there to stay. I think it's possible they may get some crops in the ground, but they have so many issues, they can't get seed and fertilizer, where it needs to be. Roads and bridges are bombed out. They're running out of fuel. So, I just question whether they can get much in the ground.”
The horrifying situation unfolding in Ukraine has taken center stage for many weeks but in the meantime, farmers in Brazil have been busy planting the Safrinha crop which is now, essentially finished and off to a quick start. Rainfall in the states of Mato Grosso, Goias and Minas Gerais in Brazil which grow about 60% of the total 2nd crop corn in that nation, has been lacking this month. Showers in March have been isolated and have produced little precipitation, current rainfall for the season is more than 4 inches behind normal in most of these key areas. This is raising concern as the dry season which typically starts within the first few days of May, is quickly approaching with no moisture reserve on hand. Conversely, Parana down through the Rio Grande do Sul in far southern Brazil have received an excess of around 4 inches of rainfall this season and precipitation totals in Paraguay are also running above normal for this time. (DTN)
Argentina’s Buenos Aires grain exchange has lowered corn and soybean yield totals for 2021/22. The current corn estimate has been dropped to 49 MMT from 51 MMT due to the excessive dryness since the beginning of the year. Soybean yields have been highly variable across the country and are below the 5-year average but the total estimated production of 42 MMT was left unchanged.
The warm temps over the past few weeks have had everyone anxiously awaiting the arrival of spring. Unfortunately, it doesn’t appear as though we are finished with winter yet. Weather models are trending towards some late season snow fall for portions of the Midwest. The arrival of this system is still days away so amounts and the exact track of the heaviest snowfall is still uncertain. The current EURO and GFS models are included below and show very differing outlooks for snow totals over the next 2 weeks.
The forecast for the agency, Weather Street is shown in the following video link: