By Doug Tenney, Leist Mercantile
March 29 was not a good day for producers as corn closed 17 cents lower. It came as a result of the USDA Quarterly Grain Stocks Report. Corn stocks were 335 million bushels higher than trade expectations. Corn fed to U.S. livestock was considerably below that seen in the previous year. Several analysts pointed out they were most surprised with corn demand in the second quarter much less than expected. This will be closely monitored in the months ahead as similar low corn usage numbers have taken place with the March Grain Stocks Report.
There was also a Prospective Plantings Report the same day. U.S. corn acres of 92.8 million acres for 2019 were higher than trade expectations by 1.5 million acres. Soybean acres were estimated to be 84.6 million acres and lower than expected. In 2018 U.S. corn acres were 89.129 million acres with soybean acres at 89.196 million acres. This year marks a significant decline in soybean acres, reversing the increase seen for many years. It also points out the unique reality in expected producer income this year. For several years producers were enjoying the ability to plant soybeans with less input costs, yet receive comparable income to planting corn. This year in numerous producer budgets, corn provides more income per acre, with input costs still higher compared to soybeans.
U.S. wheat acres were estimated to be 45.8 million acres, an all time low. Ohio producers report many wheat acres don’t look great as they came out of hibernation. My drives as well as cycling trips through central Ohio have yielded a simple conclusion. Either wheat acres look really good or really poor. The latter seems to be common throughout much of Ohio. Don’t be surprised if numerous wheat fields will be sacrificed in hopes of producing much better yields with spring planted corn or soybeans in the weeks ahead. With the huge price drop wheat has seen since last August into the end of March of $1.50, there may even be some great looking wheat which is torn up in favor of corn and soybeans. Numerous acres were topdressed during freezing temperatures the first half of March. Others did not apply nitrogen as they wanted to combine the application with herbicides. Conditions were not even close to ideal for those herbicides to be a significant weed killing factor had that combined application with nitrogen taken place.
Much of Ohio and the Midwest are saturated at the end of March with many areas receiving nearly five inches of rain during the month. Producers remain extremely frustrated with the amount of field work which remains to be completed before corn and soybeans can be planted. Late March weather forecasts call for cold, wet conditions for April. Flooding conditions are not going away anytime soon as the wet trend from last year and last fall’s harvest continues to be a dominant factor.
Not wishing to overstate the obvious, but I continue to be surprised at the gargantuan amount of soil erosion that has taken place during the winter months. The devastating erosion will take years to repair. Producers are now seeing long established waterways with huge cuts of soil missing at the edges. In addition, erosion has even taken place on nearly perfectly flat fields as a result of those numerous heavy winter rainfalls. This soil erosion has come at exactly the worst possible time when producers are hoping to cut costs as they continue to operate in survival mode, looking for better times around the corner. Yet, what they see today does not lead to that conclusion.
The early March flooding in Nebraska and Iowa was not factored into the USDA acres report. We will soon know if that becomes an even bigger deal in the weeks ahead.