USDA's January Crop Report Had a Few Surprises in Store

U of I economist Darrel Good says the biggest shock was the estimate of stocks on hand.

Published on: Jan 20, 2014

Planting projections
According to Good, another price factor that will become increasingly important is the likely magnitude of planted acreage of corn in the United States in 2014.

“The market seems to be convinced that corn acreage will decline from that of 2013 as other crops, particularly soybeans, offer better profit opportunities,” Good says.

Forming expectations about acreage, however, is more complicated than in most years. First, planted acreage of corn in 2013 was 2 million acres less than reported planting intentions, due at least in part to spring weather that delayed planting in many areas.

Second, the 8.3 million acres of total prevented plantings in 2013, along with the 1.6-million-acre net decline in acreage in the Conservation Reserve Program and the 1.1-million-acre decline in winter wheat seedings suggests that total acreage of spring-planted crops will be much larger than in 2013.

With prevented plantings near a more normal 1.5 million acres and some decline in double-cropped soybean acreage due to fewer acres of soft red winter wheat, total acreage of spring-planted crops could be 9.2 million acres larger than in 2013. That provides opportunity for large increases in acreage of soybeans or other crops without a significant decline in corn acreage.

Third, price relationships that should impact planting decisions continue to fluctuate so that producers receive changing signals about which crops the market prefers in 2014. Projected prices for crop revenue insurance that will be established in February will provide some basis for producers to solidify their planting intentions, he says.

Good concludes by saying the information in last week’s USDA reports was friendly enough to halt the decline in corn prices but does not point to a sustained rally yet this winter. The USDA’s estimate of March 1 stocks and prospective plantings to be released on March 31 will provide for a re-assessment of price prospects.

Source: University of Illinois