Commodity analysts were anticipating a decrease in corn and an increase in soybeans based on the adverse weather conditions in the eastern Corn Belt during the peak corn planting period in May. Instead, the reverse happened.
USDA raised its corn forecast from the June 12 Supply/Demand Report’s 78 million to 78.95 million acres and decreased soybeans to 72.99 million acres, a figure significantly below the average of analysts’ expectations of 74.06 million. U.S. farmers planted 74.11 million acres of soybeans in 2001.
“The biggest surprise and the one most of us are having a hard time swallowing is the corn acreage number,” Joe Victor of Allendale Inc. told a press briefing conducted by the Chicago Board of Trade. “To raise a corn number by 950,000 acres after they put it at 78 million a few days ago. I’m not sure we can accept that.”
Analysts said the USDA’s forecast could translate into a corn crop of 9.8 billion bushels and a soybean crop of 2.86 billion, both of which would be the third largest on record, given normal weather conditions for the remainder of the season.
But some observers believe unusually warm and dry conditions in the Corn Belt could reduce the 2002 crops.
“It’s much more weather than acreage at this point,” said John Schnittker, a private consultant.”
USDA said persistent precipitation in the eastern Corn Belt prevented farmers from getting into their fields and limited the acreage planted to corn in the area. “However, states in the western Corn Belt almost offset the acreage decrease in the east as they experienced good weather and were able to plant more acres than originally intended.”
Conversely, the increase in corn acres in the western Corn Belt helped decrease the soybean total.
Some observers said the “re-balancing” of the CCC loan rates in the 2002 farm bill may have played a role in the shifting acreage pattern. Congress increased the corn loan rate from $1.89 to $1.98 per bushel in the first two years of the new farm bill while decreasing the soybean rate from $5.26 to $5 per bushel.
“I think this tells us Freedom to Farm is dead,” said Dick Loewy, general manager for Doane Agriculture Research in St. Louis. “Producers appear to again be basing their decisions on government programs rather than the markets.”
For a more in-depth look at USDA’s June Acreage Report, go to http://usda.mannlib.cornell.edu/reports/