by David Widmar
With the USDA’s March Prospective Planting report behind us, attention has shifted towards the 2019 growing season. The first potential production hiccup each year is prevented planting acres. Given early flooding in Nebraska, Iowa, and Missouri, talk about prevented planting acres in 2019 has been louder than usual. With that in mind, this week’s post reviews corn and soybean prevented planting data to frame the discussion for potential outcomes in 2019.
Prevented Planting Acres
Figure 1 shows annual U.S. prevented planting acres since 2007. Specifically, acreage has been broken out to show corn, soybeans, and all other crops. Over the last 12 years, there was an average of 4.6 million prevented planting acres. That said, the average was rarely observed. Only in two years (2009, 2014) were total prevented planting acres roughly 4.6 million. Otherwise, acres were less than 4 million, or more than 6 million.
While large yields have been continued frustration for already large U.S. ending stocks, it is worth noting preventive planting has also been a contribution to large production. From 2016 to 2018, prevented planting acres were well below average. In 2018, total acres were 2 million, the third-lowest observation in 12 years. While large yields are a more visible impact on production, swings in prevented plantings do have impacts.
Figure 2 shows annual corn and soybean prevented planting acres. This is the same data from figure 1 presented differently. While total prevented planting acres in 2018 was less than 2 million acres, in the past corn (four times) and soybeans (once) have alone exceeded the 2 million acre mark.
Which is Impacted More?
A question that always comes to our minds about prevented planting is which crop – corn or soybeans- is more susceptible? Figure 2 shows that in most years there are more corn acres than soybean acres. Of course, in all but one of those years, corn acres exceeded soybean acres.
Figure 3 shows annual prevented plant acres relative to acres planting. For example, in 2018 corn prevented plant acres (which were 930,000 acres) equaled 1% of acres planting. For soybeans, prevented planting was 0.3% of planted acres in 2018.
Broadly speaking, corn is more likely to be impacted by planting hiccups than soybeans. On average, prevented planting accounts for 1.8% of corn acres and 1.2% of soybean acres. Furthermore, soybean’s relative prevented planting exceeded corn level in only two years (2007, 2015).
Thinking about 2019
The USDA’s March Prospective Planting’s report forecasted 2019 acreage at 92.8 million for corn and 84.6 million for soybeans. While it is not clear exactly how much prevented planting the USDA has built into these March estimates, it is likely to be above recent years’ observations (see footnote below). Using 12-year averages and the initial acreage forecast, one might expect prevented planting acreages of 1.6 million for corn and 970,000 for soybeans.
Given prevented planting acres have been well below average in recent years, the base-level assumption used by the USDA is likely above recent observations. For the markets to get concerned about prevented plantings in 2019, it will likely require corns relative share to exceed 2% of corn plantings (or nearly 1.9 million acres) and 1.5% (or nearly 1.3 million acres) of soybean plantings.
In short, do not confuse an increase in prevented plant acres from last year – which were historically low- with an increase from long-term averages- or what early acreage estimates might have built-in as an assumption.
Wrapping it Up
While it is admittedly too early to being estimating potential prevented planting acreages for 2019, three points are worth remembering. First, there are always prevented plant acres. In recent years, there has been as nearly 1 million acres of corn filed as prevented planting. Even the infamous 2012 had 250,000 acres of prevented plant corn.
Second, prevented plantings in recent years have been below historical averages. Should conversations about prevented plant acres become serious, it will be important to distinguish between departures from recent years versus the long-term average. In many cases, thinking about impacts relative to the 12-year average is probably more insightful.
Finally, the impacts of prevented plantings can go both ways. While our attention usually focuses on years with large prevented plantings, years with below-average prevented plantings – like in recent years- translates into more planted acres and, in turn, higher production.
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[i] At the 2019 USDA Ag Outlook Forum, the USDA forecasted 2019 Prevented Plantings for Corn, Soybeans, and Wheat at 3.2 million acres, up from 1.6 million in 2018 and 2.0 million in 2018. More details here (slide 10).