said a Texas A&M AgriLife Extension Service expert.
The preliminary USDA feed grain outlook for 2020 suggests an increase in corn acres and a record yield. That would produce a record corn crop, and combined with carryover from 2019, result in an all-time record high total corn supply.
Corn crop expectations are up
Mark Welch, Ph.D., AgriLife Extension grain economist, said the outlook coupled with other market factors could mean lower prices in the long term if the U.S. crop comes in as expected.
“It looks like they’re expecting a bounce back on corn acres this year and are estimating a record crop,” Welch said. “They’re talking about incredible production numbers.”
Welch said corn dominates the feed grain market, especially in Texas, and drives the feed grain picture.
Last year, nasty spring conditions in the Corn Belt prevented farmers from planting 10 million to 14 million acres. But corn acres held about steady with the last several years, with about 90 million acres still planted nationally in 2019.
The USDA report estimates 94 million acres of corn will be planted nationally in 2020.
“That’s a significant increase,” Welch said. “They are just beginning the farmer survey and are basing their preliminary numbers on math models. The prospective plantings will become clearer in March when they survey producers.”
The report also estimates per-acreage production to increase to 178.5 bushels compared to the production peak in 2017/2018, when acre-production averaged 176.6 bushels.
“It will take a good season to do it, but that is an amazing number that would push total production beyond 15 billion bushels, which is a huge number,” he said. “You’re looking at 1.8 billion more bushels than the current estimate of the 2019 crop if conditions play out favorably.”
What’s that mean for Texans?
Texas has an advantage when it comes to production and grain marketing—an early crop, Welch said. Producers in south, southeast, the Coastal Bend and central Texas will have much of their harvest ready to market before the production picture for the Corn Belt is clearer in August.
The estimates for 94 million acres, 178.5 bushels per acre and the expected carryover does not bode well for strong corn prices in 2020, Welch said. But getting to market before speculators have a clearer picture of a potential corn crop could help.
“There will still be a lot of things unknown about the Corn Belt crop, and that’s a market advantage for some Texas growers,” he said. “What happens there over the next few months weather-wise and with updated prospective planting reports will weigh on where prices go.”
There are still many aspects of the 2019 crop that is unknown, Welch said. Some acres went unharvested and 2019 quality and quantity reports have not fully determined the carryover crop’s value in various markets.
Global trade of many products and commodities to China were anticipated to improve with the signing of the Phase One trade agreement, but that could change due to animal and human diseases there disrupting the market, Welch said.
With futures prices for corn trading at about $3.80 per bushel and cotton around 68 cents per pound, neither paints a clear path for Texas growers weighing their options, he said.
“It’s too close to call,” he said. “So, I think you’ll see producers deciding based on what they grow best or based on an agronomic-rotation schedule for their operation. It will be a challenge for many producers to budget for black ink at these prices, so they will probably base their decision on other factors.” — Texas A&M AgriLife Extension
