Planting season gets underway–what’s the 2016 crop outlook?
April 14, 2016
For many crop producers across the country, April marks the beginning of the hustle and bustle of planting season. Robert Walsh, a corn and soybean farmer from Elk Point, South Dakota, anticipates getting his corn crop planted by early this week.
"We're a little wet and cold yet in the Sioux River Valley, but I think a lot of guys in our area will get rolling on their corn planting for 2016," said Walsh.
Despite the low crop price outlook, Walsh doesn't plan to change his planting rotation for the year.
"We're staying on our normal rotations this year despite the price predictions," he said. "However, I've heard stories of guys switching things up or not getting their loans renewed from Farm Credit Services, so I know the surplus of corn and the low prices are impacting farmers across the country."
The USDA prospective planting report, released on March 31, 2016, estimates that 93.6 million acres will be planted to corn in the U.S. in 2016, which is 6 percent higher than 2015.
"Corn ending stocks is estimated to be 1.86 billion bu. for the 2015-2016 marketing year according to the USDA-WASDE report released on April 12, 2016," said Lisa Elliott, South Dakota State University (SDSU) Extension assistant professor and commodity marketing specialist. "The April WASDE report estimates $3.55/bu. corn average farm price for the 2015-2016 marketing year."
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Meanwhile, the USDA prospective soybean planting report, released on March 31, 2016, estimates that 83 million acres will be planted to soybeans in the U.S. in 2016, down 1 percent from 2015.
"Soybean ending stocks is estimated to be 445 million bu. for the 2015-2016 marketing year according to the USDA-WASDE report released on April 12, 2016," she added. "The April WASDE report estimates $8.75/bu. soybean average farm price for the 2015-2016 marketing year."
She added that baseline projections report estimates that the DDGS price to be 10 percent higher than the projected corn price based upon their baseline balance sheet estimates.
Dale Tlam, CHS sales agronomist in White Lake, South Dakota, said he isn't seeing many producers change their planting plans based on corn and soybean prices.
"We've certainly seen less winter and spring wheat planted," he said. "However, there are plenty of beef producers in our area, and I think grain farmers will look to use those grains for feed and are also considering planting crops for hay such as oats, sorghum and sedan grass."
The March 31, 2016 USDA prospective planting report reflects what Tlam is seeing locally. The report estimates that 49.6 million acres will be planted to wheat in the U.S. in 2016, which is 9 percent lower than 2015. Wheat ending stocks is estimated to be 976 million bu. for the 2015-2016 marketing year according to the USDA-WASDE report released on April 12, 2016. The April WASDE report estimates $4.95/bu. wheat average farm price for the 2015-2016 marketing year.
Lower corn prices present opportunities for cattle feeders, said Elliott.
"If lower corn prices for the 2016/2017 marketing year as compared to 2015/2016 are realized, this should provide producers who feed cattle an opportunity to obtain feed stocks at lower input costs and larger quantities," she said. "With abundant traditional supplies, traditional feeding rations will likely be employed. USDA estimates show that the percent of corn harvested for silage to total planted corn acre has stayed relatively stable over the past five years, with slightly more corn harvested for silage during the drought of 2012 due to greater value in the forage than grain."
"There's such a huge surplus of corn still in bins and at the elevators," added Walsh. "That's not a good sign when the elevator still has bunkers on the ground in mid-April. One thing that could help us use this surplus domestically would be getting E-15 approved. A lot of ethanol plants have reduced outputs because we've capped out demand. We need to utilize more corn domestically, but of course this requires things to pass in the government, so we'll wait and see."
According to the USDA Grain Stocks Report released March 31 2016, "Corn stocks in all positions on March 1, 2016 totaled 7.81 billion bu., up 1 percent from March 1, 2015. Of the total stocks, 4.34 billion bu. were stored on farms, down 1 percent from a year earlier. Off-farm stocks, at 3.47 billion bushels, are up 3 percent from a year ago."
"I don't have much hope for grain prices if we have an average or above average crop this year," he added. "Unless there's a drought in some of the 'I' states (Iowa, Indiana and Illinois) to help bring the surplus down. All we can do is choose to be optimistic. We're hoping for a nice, dry planting season in our area, but I know folks in other areas around the state could sure use the rain."
Tlam believes area farmers are still going to push to exceed previous yields, and he said the moisture White Lake received last fall is keeping spirits high.
"The moisture we received last fall was a positive to help the mood going into spring planting; if we were dry, the growers might be more pessimistic," said Tlam. "For the most part, the producers who want to produce the yields, they are going to go after it. You can't go into the planting season expecting to fail. There isn't a lot of room for negativity in farming. We've been here before; we'll weather this storm like we have others. Farmers are definitely going to be in the fields this week, and it looks like we're off to a good spring season."
Walsh offered some advice to farmers to help survive a down market.
"Watch your costs, and try to repair stuff vs. buy new," he advised. "Save your money where possible, but don't underspend on things that can make you a lot of money. For example, don't penny pinch when it comes to certain fertilizers or seed."
Walsh said he's seen more producers slow down their normal trade patterns on equipment in the past couple of years.
"I've noticed a lot of people are choosing to keep the equipment for another year and opt to just fix it instead of buy something new," he said. "The implement dealers will definitely be hurt on this. The sales side is going to be drastically cut this year, but I see the parts and service department picking up because people are going to do more fixing on what they have."
Livestock producers looking to invest in grains will be watching closely to see how the 2016 harvest turns out. Meanwhile, as the spring planting season gets underway, grain farmers will be looking for the stars to align to turn prices back to their favor.