USDA Prospective Plantings Report
analysis by Ethanol Market, April 1, 2009
Several weeks ago, we reported “fourteen days and counting!!!” with respect to the Grain Stocks report and the Prospective Plantings report, both of which were released today, March 31, 2009.
The March 1, 2009, inventory estimate report is quite important for both corn and soybeans, but probably more significant for corn, because for this time in the marketing year, the actual rate of soybean consumption is more predictable than corn, so no surprises are really expected for soybeans
We predicted that the Prospective Plantings report will certainly be a surprise to everyone, because right now it is very difficult to predict due to the volatility in the crude oil, ethanol, corn and soybean markets. In February 2009, the last official projection by the USDA, was approximately 86 million acres for corn plantings, and 77.0 million acres for soybeans. At the time, we thought that the USDA corn estimate was high, and that the soybean estimate was low.
Corn planting for 2008 totaled 85.983 million acres. As of March 1, 2009, our 2009 projection for corn plantings was between 81.00 and 82.00 million acres, due to soybean favor and uncertainty in the ethanol market.
Two weeks ago, Reuters reported that Informa Economics estimated 2009 U.S. corn plantings 81.419 million acres and soybeans at 81.502 million acres. They also reported that Brokerage Allendale forecast for 2009 United States corn plantings is at 85.406 million acres and soybean plantings at 80.439 million acres.
Well, the Plantings Report was released today, March 31, 2009, and indeed there were some surprises. The USDA reported that corn planting acreage intentions are down 1% from 2008, soybean acres will be up slightly, all wheat will be down 7% and all cotton acreage will be down 7%.
The USDA advised that corn growers intend to plant 85.0 million acres of corn for all purposes in 2009, which is down just 1% from last year, due to lower corn market prices and unstable input costs, which are both discouraging some growers from planting corn. If these numbers hold up, it will be the second consecutive year to year decrease since 2007. However, at 85.0 million acres, the plantings will be the third largest acreage since 1949, and just below 2007 and 2008. So, the 85.0 million corn acres is a surprise to many experts, and was much higher than most estimates.
Expected acreage is down from last year in many States, however, producers in the 10 major corn producing States (Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin) collectively intend to plant 66.3 million acres, which is up slightly from the 66.1 million acres planted last year.
With respect to soybeans, farmers intend to plant 76.0 million acres in 2009, which is up slightly form 2008. Additionally, if this number holds up, it will be the largest acreage planted in the Unites States ever, a new all time record. Acreage increases of 100,000 acres or more are expected in Arkansas, Iowa, Kansas, Mississippi, Nebraska, North Carolina, North Dakota, and Ohio.
Regarding other crops, all wheat planted area is estimated at 58.6 million acres, down 7% from 2008, and all cotton plantings for 2009 are expected to total 8.81 million acres, 7% below last year and the lowest since 1983.
The slightly lower acreage, combined with higher than expected demand, propelled CME corn prices to a ten week high on Tuesday, closing up 18.4 cents to $4.046 per bushel.
Corn stockpiles, as of March 1, 2009, increased 1.5% to 6.958 billion bushels from a year ago. However, previously, many analyst had projected slightly higher stocks, based on slightly lower demand. The lower stockpile indicates fairly strong feed demand and higher than expected ethanol demand. As discussed, the result was that corn futures for May delivery increased 4.8%, up to $4.046 per bushel, . Meanwhile, unseasonably cool and wet weather projections for many parts of the Corn belt and South during the next 10 days, could possibly negatively impact the final corn numbers.
