2020 US Planting Estimates

Market Analysis

Going into February, three questions are on the grain markets minds – (1) When will the Coronavirus concerns lift, (2) When and How much Ag Products will China buy in the next 23 months and (3) How high will Corm and Soybean seedings rebound from 2019 levels. The first 2 questions don’t really any answers at this time, but some educated ideas about 2020 US plantings seem possible. The USDA will reveal their current major planting ideas at their annual Agricultural Outlook Forum being held on Feb. 20 & 21 in Washington, DC. The USDA’s Chief Economist Johansson will provide basic details during his remarks on Feb. 20, while the complete planting ideas will be out on Friday.

Given 2019’s record prevent plant area of 19.6 million acre, the return of a normal US spring should rebound the 8 major crops’ plantings. However, with over 6 million acres of corn and 1 million acres of soybean left to harvest in the northern and NW regions of the Midwest in early December, many fields will remain unplantable because of excessive soil moisture in spring 2020. Each fall, the USDA issue economic-based new crop baseline acreage levels as part of US Farm Program. These calculation in October projected corn area to increase to 94.5 million and soybeans to jump to 84 million acres. Combined these 2 crops could be 12.7 million higher in acres.

We are expecting a slight variation on the upcoming Ag Outlook updates given production costs and the recently signed US/China trade deal with corn at 93 and beans at 85 million acres. Higher cotton seedings because of the recent trade deal are expected. US small grains, rice and sorghum areas will likely be near the USDA projections.

Overall, 2020’s US major crop area could rebound to 251.4 million. This area will be 2.5 million less than 2018 and the smallest total US seeding level since 2011, except for last year. Utilizing the USDA’s Baseline demand forecast for the 2020/21 crop year, no excessive build-up in 3 major crops supplies are expected. We’ll update details ahead of Ag Outlook Forum. 

What’s Ahead:

With the Chinese returning from their New Year’s, optimism about commodity waivers providing some stability to the health shaken markets exists. However, sizable S. AM crops and the USDA’s late month look at 2020 crop likely limit upside. Utilize recoveries to price 10% of corn and beans at $3.90 & $9.25 and 15% of your new crop output at $4.00-05 and $9.40.