FORT COLLINS, Colo. (Reuters) - There is no doubt that new-crop Chicago corn and soybean futures have risen to profitable levels for U.S. farmers in 2021, and that should support strong plantings in the spring. But the dwindling domestic stockpiles magnify the impending acreage showdown even further.
U.S. Department of Agriculture data suggests domestic corn and soybean stocks-to-use for 2020-21 at 10.6% and 3.1%, respectively, both seven-year lows. Some industry analysts have suggested that with supplies that tight, the United States cannot return to a plentiful situation within the 2021-22 cycle, even with strong harvests.
Whether corn or soybeans can observe the bigger recovery in stocks will start with farmers’ planting decisions. Farmers will begin relaying to USDA their 2021 spring crop plans in early March for the prospective plantings report due at the end of that month.
There are various factors that influence farmers’ decisions, but the ratio of CBOT November soybeans to December corn is a primary indicator of implied profitability. So far in January, that ratio has hovered near record, soybean-favoring levels for the time of year and is comparable with only 2017 and 2018.
Soybean plantings reached a respective 90.2 million and 89.2 million acres in those years, far above 2016’s 83.5 million, a distant third place in the record books.
That implies that soybean acreage should be strong in 2021, but U.S. farmers love to plant corn, and many of them report more confidence in corn yields than those for soybeans. New-crop corn prices are at seven-year highs for the time of year.
New-crop soybeans sit at eight-year highs for the date, but it is interesting to note that speculators have recently adopted a particularly bearish view of soybeans relative to corn. The stance is comparable with the same point in 2015 but opposite to those of 2017 and 2018.
HIGH PRICES STAY HIGH?
There are still a lot of trading days left in January, but the 2021 corn and soybean insurance guarantees to U.S. farmers appear on track for at least six-year highs, if not seven, and that should encourage the acreage boost this spring.
Within the last three decades, the average price of November soybeans during February, which sets the insurance guarantee, was within 5% of the January average in 26 of those years. The same stat for December corn is 24 of the 30 years.
Five of the six years with corn moves larger than 5% in February featured price gains and only one was a significant loser, 2009. The four soybean outliers were split: two up and two down.
The average settle for new-crop corn and soybean futures between Monday and Wednesday was about $4.51 and $11.69 per bushel, respectively. Applying the 5% bounds would yield a corn range of $4.28 to $4.73 per bushel and a soybean range of $11.10 to $12.27.
This assumes futures in January will not change much from current levels for the sake of a simple example, but even the lower ends of those ranges are significantly better than in prior years.
The corn insurance price averaged $3.93 per bushel in the past five years while soybeans averaged $9.58. The 2021 prices will challenge the 2014 levels of $4.62 and $11.36, but they are still well off 2013’s $5.65 and $12.87.
These higher prices will allow farmers to plant corn and soybeans this spring with fewer concerns about profitability than usual. If the harvest price (average of November soybeans and December corn during October) is lower than the February projected price, farmers get to use the February one to calculate their revenue guarantee.
The actual payout of the federally sponsored revenue protection crop insurance depends on a producer’s chosen coverage level.
BIGGER UNIVERSE
USDA on Tuesday placed 2020 U.S. principal crop planted acres at 310.1 million, up 7 million from 2019’s flood-ridden season but down from 319.3 million in 2018. That suggests U.S. farmers could find at least an extra 9 million acres to plant in 2021.
Updated data from USDA’s Farm Service Agency on Tuesday showed 10.2 million acres prevented from planting in 2020, the second-highest on record but down from 19.6 million in 2019. Low prices in the spring of 2020 discouraged farmers from planting on unfit soils.
Prevented acres are likely to return to lower levels in 2021 barring any weather complications in the spring. The 2016-2018 average was 2.6 million acres, with a low of 1.9 million in 2018.
Winter wheat has occupied a larger share of the U.S. acreage mix than analysts expected. USDA placed winter wheat plantings for the 2021 harvest close to 32 million acres, up from the trade guess of 31.5 million and 2020’s 30.4 million, a 111-year low.
The opinions expressed here are those of the author, a market analyst for Reuters.
Editing by Matthew Lewis
January 14, 2021 at 09:27PM
https://ift.tt/3sBHOiS
Column: Rising new-crop corn, soy prices intensify U.S. acreage duel - Reuters
https://ift.tt/3gguREe
Corn
No comments:
Post a Comment