Farmers still have time to make planting decisions for the 2020 crop.
But, regardless of the crop or seed variety, one hope shared by many involves returning acres flooded out last season back to crop production.
U.S. farmers claimed a record 19.4 million prevented plant acres last season.
“Will we be able to get those acres back in production?” Chad Hart, Iowa State University associate professor and crop marketing specialist, said at the 53rd annual Purdue Top Farmer Conference
“One of the challenges, production-wise, is we’re looking at a weather pattern similar to what we went through last year,” he noted. “The outlook calls for it to stay wet this winter. The spring outlook is also wet.”
A late harvest and wet conditions last fall also cut the window for fall fieldwork and anhydrous ammonia applications short, which compresses more work into the spring season.
Meanwhile, farmers face tight crop margins again this year.
“Uncertain economic conditions plagued the 2019 agricultural economy, leaving farmers with tough decisions ahead of planting” said James Mintert, ag economist and director of the Purdue Center for Commercial Agriculture.
However, if farmers succeed returning acres back to crop production, issues with large stocks could intensify and pressure prices.
“One of the biggest issues facing the ag markets right now is our ability to overproduce,” Hart said. “We have the potential for the largest (corn) crop ever in 2020 (if planted acres increase to 94.5 million and the yield averages 178.5 bushels per acre). Where are these acres coming from? Prevented plant.”
U.S. farmers also planted just 30.8 million acres of winter wheat last fall, the second lowest on record, leaving more opportunities for plantings of other crops this spring.
Elsewhere, South American farmers are on track for another large harvest this year. The U.S. produces nearly one-third of the world’s corn, but Brazil recently passed the U.S. as the top producer of soybeans worldwide.
“We’ve got some big changes taking place on the supply side,” Hart said. “One of the reasons we’re struggling right now is there’s a lot of competition.”
What’s the next possible demand driver that could boost ag markets in the future? Hart looks to exports.
“The international marketplace is struggling,” he said. “But, in the next five years, the international market is where we could see the biggest boost and support prices. We’ve seen tremendous income growth around the world.”
But a potential turnaround in the ag markets could still be at least two years away.
“Right now, I’m a short-term bear and a long-term bull for agriculture,” he said. “Demand is building for our products. It’s a question of managing to get to that point.”
Hart advises farmers to study their breakeven points and look to make crop sales on small rallies.
“One of the biggest challenges we face is lower prices the past five or six years, but that doesn’t mean there weren’t opportunities,” said Hart, who noted crop prices often rise in the spring or early summer, such as $4.70 December corn last June that was the highest price in five years.
“I was at a meeting that day (of the peak corn price) and I asked farmers what they’re doing about it. They said, ‘waiting for $5,” Hart added. “Don’t wait, make sales. It’s hard to lose money when you’re making a profit.”