Bigger Acreage Helps Soften Flood Losses

USDA's June 30 Acreage Report shows farmers have planted more land to corn than originally forecast.

Published on: Jul 3, 2008

The extensive flooding in Iowa and several other Midwest states during June wiped out nearly 2 million acres of corn, according to USDA's acreage survey released June 30. However, the government survey also shows that farmers planted more land to corn than originally forecast, partially offsetting the impact of the floods. USDA now estimates that farmers have planted 1.3 million more acres to corn this spring than the March Planting Intentions survey had forecast.

Market analysts say this could help cushion the blow that soaring grain prices are taking on consumer food prices, and on industries that rely on grain such as pork producers and ethanol refineries.

Nationally, corn planted for all purposes is estimated at 87.3 million acres, down 7% from last year. Despite the decrease, corn planted acreage in 2008 is the second highest since 1946, behind last year's total of 93.6 million acres. Farmers expect to harvest 78.9 million acres for grain, down 9% from 2007. If realized, it will be the second highest harvested acreage since 1946, trailing only last year.

Good news for livestock, ethanol plants

In Iowa, there are 13.7 million acres planted to corn this year, the most of any state, according to the June 30 report. Iowa has 12.8 million corn acres projected to be harvested. "Corn acreage is up from the March survey and even with all the flooding in June, we are still poised to harvest the second largest U.S. corn crop," points out Tim Recker, president of the Iowa Corn Growers Association and a farmer from Arlington in northeast Iowa.

"Farmers will produce," says Julius Schaaf, chairman of the Iowa Corn Promotion Board who farms near Randolph in southwest Iowa. "Farmers will do what the market tells them to do. This report shows that we have more corn acres to work with now, which is good news for livestock feeders and for the ethanol plants."

More than 10% of his land, along the West Nishnabotna River, was flooded in June. But the corn on the higher ground "looks fantastic," says Schaaf.

Although more corn was planted than expected in 2008, you must factor potential yields into the production equation--and crop yields could still be down significantly this year. Corn that had to be replanted after the flooding is vulnerable to a frost this fall. And summer heat could hurt corn plants that didn't put down roots this spring as deep as they normally do. Because the soil was so soggy in June, this year's corn crop is generally shallow-rooted.

USDA will survey acreage again in July

Still, the fact that farmers have planted 1.3 million more acres of corn in the U.S. than the USDA had projected in March is welcome news to livestock farmers and ethanol plants that have been watching their production costs soar with the skyrocketing price of corn. "Our industry needs to survive, and I think farmers are committed to providing enough corn for everybody," says Walt Wendland, president of Golden Grain Energy, an ethanol production facility in Mason City.

The extensive rains and flooding during June caused farmers in several Midwest states to change their harvesting intentions for crops already planted, and to modify their planting decisions for the small percentage of acres not yet planted, and to consider replanting options. USDA collected most of the data for the June 30 Acreage Report before the majority of the flooding occurred.

In an effort to more accurately determine how many acres farmers still intend to harvest for grain, USDA re-interviewed approximately 1,200 farmers June 23-25 in the flood-affected areas. As a result it was determined that U.S. farmers intend to harvest 90.4% of their planted corn acres for grain. This is a change from 92.4% as measured during the first two weeks of June. Nationally, farmers intend to harvest 96.8% of their planted acres of soybeans.

Without this additional survey data, historical averages would have indicated 98.7% of soybean acres to be harvested. USDA will conduct a more extensive acreage update survey in July. Findings from that survey will be incorporated in the August Crop Production Report which will be released August 12.

U.S. soybean acreage estimated up 17%

USDA's June 30 Acreage Report says Iowa's intended planted acres for beans are 9.4 million acres--up 10% from 8.6 million acres planted last season. Growers are likely to harvest just under 9 million acres of soybeans in Iowa.

Nationwide, soybean acres are reported to be up 17%, according to the June 30 Acreage Report. Harvest acres for Iowa soybeans in 2008 are projected to be 8.95 million acres. The reduction from planted to harvested acres is likely the result of taking some of the recent flooding into consideration.

Curt Sindergard, president of the Iowa Soybean Association who farms near Rolfe in northwest Iowa, was surprised at the June 30 Acreage Report.

Replanted soybeans will have lower yield

"The report seems to include the acres that have been replanted in ponds," says Sindergard. "It's common to see 3- and 4-acre patches of replanting this year, even in the better crop areas, but we can't expect a full yield from those."

Noting that USDA plans to resurvey and come out with another update in early August, Sindergard says "We expect the acreage numbers to be adjusted further with more detailed reporting in the August report. In addition, yield per acre is still a big unknown and will impact the upcoming supply greatly. While the current report gives acres planted, yield will be affected by the combination of late planting, flooding and cooler temperatures."

With grain prices at all-time highs, farmers can expect see continued volatility in the corn and soybean markets until crops are in their reproductive stages and the survey reports can give better estimates. "Overall, we anticipate that soybean prices will remain strong as the result of growing global demand, particularly from nations like China," says Sindergard.