Two data releases from the USDA created a lot of confusion in the market as they pointed to a seemingly incongruous dynamic: The number of corn acres successfully planted this season and the number of corn acres prevented from being planted were both well above market expectations.
However, a closer examination showed the rationality of both moves. A surge in corn prices this spring prompted a hefty shift to planting corn at the expense of soybean area. In addition, a government subsidy program incentivized farmers to get as much seed in the ground as possible, sometimes at the expense of other crops.
The large growth in corn plantings this year came at the expense of soybean acres. The chart above shows the sum of planted area and prevented area for both corn and beans historically, along with the preliminary figures for both crops in 2019.
The reports were released by two different USDA branches, the National Agricultural Statistics Service (NASS) and Farm Service Agency (FSA). The reports’ release drove corn futures prices on the Chicago Board of Trade to their largest decline since 2013.
Going into the report, the average market expectation called for a nearly 700 million-bushel decline in the NASS corn production estimate. Instead, NASS actually increased its production estimate, with both planted area and yield above expectations. NASS estimated corn planted area at 90 million acres based on farmer surveys, FSA certified acreage, and satellite data.
Then the FSA released certified and prevented acreage. Those figures will be updated monthly until January when the data is considered final. Both certified planted acres and prevented area will increase each month, and the current August data is a minimum level.
NASS used the FSA certified planted area in its own planted area estimates. The 85.9 million acres of corn reported in the August FSA data is 95% of the NASS corn area total. That’s right in line with the historical August FSA reporting rate. NASS does not, however, use FSA prevented area in its calculation. At 11.2 million acres, the August-reported corn prevented area total is more than three times the previous high reported by the FSA for 2013.
When the FSA prevented area is combined with the USDA’s planted area estimate of 90 million bushels, it implies US farmers intended to plant at least 101 million acres of corn this year. Its an astounding figure, and it’s led many to question the USDA’s estimates, especially since they differ so drastically with market expectations. However, clarity comes when you consider the soybean acreage figures.
The USDA’s soybean planted area estimate is down 12.5 million acres from last year. Combining the 4.4 million acres of soybean prevented area from the FSA release with the USDA soybean planted area estimate of 76.7, implies farmers intended to plant 81 million acres of soybeans. That’s down over 8 million acres from last year.
Summing it up, the USDA planted area estimates combined with the August prevented area figures implies US farmers intended to plant 182 million acres to corn and soybeans. That’s up less than 3 million acres from 2018. It is a significant year-over-year gain, but it can be reasonably explained by shifts from other crops (like wheat and cotton) and the government MFP subsidy program that incentivized producers to plant.
Record wet weather this spring in the US led to record delays in corn planting. Corn futures prices popped by $1 per bushel, or more than 25%, between early May and mid-June. That move dramatically increased the profitability of planting corn over soybeans in the US Corn Belt, and the latest USDA data indicates just how persuasive that price move was. Poor conditions prevented a record number of US acres from being planted, but corn planted area is still estimated to increase by almost 1 million acres year over year.
The display above provides a visualization of the USDA Farm Service Agency's county-level prevented area for both corn (left) and soybeans (right). Figures will be revised as the FSA updates its totals throughout the year.