Sometimes it seems like the agencies don’t always communicate with each other. A pair of recent reports drove that home last week.
Monday, Aug. 12 saw the release of a pair of reports that likely helped rock the agricultural markets: the Farm Service Agency’s (FSA’s) Crop Acreage Data Reported to FSA report, which includes a portion often called the prevented plantings report, and the World Agricultural Supply and Demand Estimates (WASDE) report.
On the one hand, the prevented plantings report showed the highest level of prevented plantings ever reported, with corn and soybeans making up over 80 percent of the acres. On the other, WASDE increased its projections for the 2019/2020 corn crop up from previous reports.
The two reports conflicted on the detail of number of corn acres.
While the WASDE report estimated 90 million acres of corn was planted, the FSA report cited 85.87 million, a 4.6 percent difference. DTN’s Chris Clayton noted that FSA and the National Agricultural Statistics Service (NASS), which puts out WASDE, look at different factors in creating their reports. NASS will include corn planted for grain, silage, cover crops or other uses, while FSA only includes corn for grain or silage.
According to the prevented plantings portion of the FSA report, farmers were unable to plant over 19.26 million acres of crops in the 2019 planting year.
“This marks the most prevented plant acres reported since USDA’s Farm Service Agency began releasing the report in 2007 and 17.49 million acres more than reported at this time last year,” noted the agency in its announcement of the report.
“Agricultural producers across the country are facing significant challenges and tough decisions on their farms and ranches,” USDA Under Secretary for Farm Production and Conservation Bill Northey said in the announcement.
“We know these are challenging times for farmers, and we have worked to improve flexibility of our programs to assist producers prevented from planting.”
Of those 19.26 million acres, 11.21 million of them were corn acres and 4.35 million of them were soybeans. The heaviest losses of both crops were seen in South Dakota (2.85 million and 850,864 acres, respectively), Illinois (1.14 million acres, 330,638 acres), Minnesota (999,513 acres, 161,528 acres), Ohio (880,992 acres, 598,981 acres), and Missouri (744,273 acres, 477,731 acres).
FSA credited the heavy rainfall and flooding in the Central Plains and Midwestern states that happened earlier this year for the prevented plantings results.
WASDE report
“The corn and soybean production pegs from USDA-National Agricultural Statistical Service did not disappoint relative to surprises,” reported the CME Daily Livestock Report (DLR) last Tuesday.
“Corn plantings at 90.005 million acres were above all industry analyst expectations. Meanwhile, soybean plantings came in below expectations at 76.700 million acres, 1.3 million acres below the lowest forecast in the sample of industry guesses.”
Despite this, the yield estimates increased by 3.5 bushels per acre (bpa) to 169.5 bpa. However, even the report’s explanation does not address why the yield estimates were increased, and even acknowledged that the recent Crop Production report suggested yields will be lower than a year ago in some key corn states.
“Of the major producing states, only Missouri is forecast to have yields above a year ago,” the report’s summary noted.
“Risks to the size of this fall’s harvest are elevated this year due to the delays in planting and the shorter time interval for the crop to reach maturity,” cautioned the DLR.
“USDA-NASS is using an assumption that 8 million acres of corn will be cut for silage or abandoned of the 90 million acres planted. Last year, 7.4 million acres of the 89.1 million acres planted was not harvested for grain. In 2017, 7.5 million acres were omitted from grain harvest. In 2012, close to 10 million acres went unharvested. Similarly, average yield per acre is also a question mark, especially if a freeze in late September or early October cuts the crop maturation process short.”
In addition to yield estimate increases, WASDE updated estimates of corn production (up 26 million bushels to 13.9 billion bushels), corn used for ethanol (down 25 million bushels), exports (down 100 million bushels to 2.05 billion bushels), and ending stocks (up 171 million bushels). The increase in estimated ending stocks resulted in a reduced projection of average price received by producers to $3.60.
“USDA assumptions for corn usage and inventories are in close balance resulting in similar price behavior,” commented the DLR.
“Corn prices at the farm for the crop year coming to a close will average near $3.60 and the projected value for the next crop year has little basis for change. Any downward adjustments to average yield or harvested area would push the average price for the coming year above $4.” — WLJ
