USDA TO PRINT HIGHER CORN ACRES NEXT WEEK, ANALYST SAYS
Primary reference to these observations usda data......
Brian Doherty's article points out the obvious and we should expect it.
Regardless of the numbers, usda will increase acres. prices have improved.
It is simple like the Cuomo theory on the ease of farming, higher potential return leads to higher acres planted. Shouldn't be news to anybody but it is another slap in the face for farmers. Brian thinks you need that helpful reminder.
It It isn't really that way. Prior to 2005 corn acres were thought to be maxed out somewhere below 90m acres. Beginning in 2006 sudden and big changes in corn acres became possible, at least on paper. The reality support for this is found in wheat and the Dakota states attempt to be moved into the corn belt. Along with Minnesota expansion of corn acres. Wheat alone has given up 40 million acres to other crops..... a trend that doesn't seem to change.
Does increases in production bring lower prices?
The one year largest change in corn acres was a shocking 15.2 million acres from 2006 to 2007. Unbelievable on a historic perspective. An unpredictable increase in price followed with corn leaving the $2 price level for the foreseeable future (according to usda data) with an increase to $3.39 in '07 and to $4.78 in '08. That increase in planting brought on an increase of 1.5 billion bushels of production and an increase of price or 48.7%
The next highest increase in corn acre predictions(adjusted) was in 2012 after 2011. An increase of 5.35 million acres resulting in an increase in usda average corn prices to $6.67 and a decrease in production of 1.558 billion bushels.
And the third major increase in assumed planted acres came in 2016 when again usda saw fit to print a 5.98 billion bushel increase in planted corn acres. Resulting in a printed 1.5 billion bushel increase in production which gave us a decrease in price of $0.23 per bushel.
Grabing a conclusion or two in observations sw goes here.
IMO. some thoughts as to what we and usda consider.
1. Producers planting choices cannot be blamed for either increases in production or decreases in price. Those are farmer ego builder myths
2. Marginal acres make up most of the planting changes and do not raise production consistently enough to matter.
3. Weather and demand are by far the biggest driver in price for corn. Producer decisions (pop, acres, crop, Fert, etc) are marginal at best in driving production changes. They drive the cost of production and reduce profits for the most part. The positioning of the jet stream over the last 20 years has been very favorable to corn belt expansion and production. When it swings back south the production potential is not as good.
4. Weather is probably the biggest driver in production. Weather like the 2011-2 droughts, 2020 Wind damage in Iowa and the western plains, the 2006 Floods in June in nw Ohio nearly took the eastern corn belt out of production, and the Nebraska & Iowa Floods of 2019 all change production more significantly than given credit. The results of these things can be seen in this data base but seldom get acknowledged by usda.
5 It is somewhat a function of usda choices..... prior to 2003 emphasis was on recording the average reality for crops. Since then usda has been fixated on recording record production potential numbers. 2003 corn production was first reported by usda to reach 140 bu/a in history..... the following year usda used 160 -- until 2003 the US has never recorded a 10 billion bushel corn crop and were sitting in the 7.5 to 8 billion area until the mid 1990's. Yet the major improvements driving production came well before that.... GMO and satellite technology came in the 1980's. Irrigation peaked in the 1980 &90 s(declining since including California's diminishing agriculture, Colorado's urban sprawl water grab). Chemical fallow and reduced tillage 1970 and 80's. What has improved into this century is tiling which has enhanced average production regionally.
Re: A bigger unknown, Brazil's second corn crop
It's well understood that even though it was "untimely" rain that delayed Brazil's soybean harvest & subsequent second-crop corn planting, the 30-day precipitation record looks more like that below than otherwise, and nowhere is there any great excess.
In many places, the second crop was planted up to a month late and without timely rain in May might not yield anywhere near expectation. It might not matter so much how many acres get planted here if there is a significant shortfall in SA.