The final three rising cycles have been nothing in need of turbulent for U.S. row crop farmers. However growers are discovering new methods to roll with the punches as Mom Nature and unstable markets proceed to sow uncertainty when making administration choices on the farm degree.
What else is on farmers’ minds forward of this week’s USDA experiences? The August 2021 Farm Futures survey supplies a couple of insights as to the place farmers suppose markets and profit outlooks are heading as harvest approaches.
The August 2021 Farm Futures survey was carried out through e-mail questionnaire July 13 – Aug. 1, 2021. A complete of 737 growers from throughout the nation responded. The survey’s margin of error was calculated at 3%.
Associated: Bryce Knorr – Grain storage lessons learned
Decrease forestall plant acreage in 2021
Planting season for 2021 prevented a lot fewer obstacles to farmers – significantly within the Northern Plains – than in 2020 and particularly than 2019. Solely 6% of survey respondents reported certifying acres as prevented from planting for crop insurance coverage, down from 10% a 12 months earlier due to dryer situations earlier this spring.
Worthwhile row crop futures costs paired with the improved planting situations paved the best way for greater corn and soybean acreages this 12 months. This spring’s whole corn and soybean acreage of 180.2 million acres marked the most important mixed corn and soybean planted acreage since 2017. That 12 months, the most important mixed acreage was planted, totaling 180.3 million acres.
Barring any extra climate snafus this 12 months, 62% of survey respondents don’t count on to obtain income or climate funds in 2021. About 11% of growers affected by drought anticipate insurance coverage funds to be paid out for climate catastrophe aid. One other 17% of respondents solely count on to obtain a marginal quantity of insurance coverage funds which aren’t more likely to cowl premiums prices.
Anticipating USDA yields
In an earlier article, the August 2021 Farm Futures survey predicted 2021 corn yields would are available at 178.7 bushels per acre whereas soybean yields averaged 51.3 bushels per acre. Learn extra in regards to the supply and demand impacts of those estimates here.
Why do these outcomes range from USDA’s present projections of 179.5 bpa for corn and 50.8 bpa for soybeans?
To make sure, crop situations throughout the Heartland are variable for a wide selection of causes. Drought within the Higher Midwest will doubtless play a big position in decrease yield estimates with 54% and 49% of corn and soybean growers, respectively, within the Farm Futures’ survey citing warmth and drought stress as having essentially the most important affect on yields.
However different components in differing areas of the Midwest have additionally impacted crop yields this 12 months. Extreme rains and funky soil temperatures throughout planting may doubtlessly maintain again corn yields extra so than these of soybeans by the point combines start rolling this fall.
Most farmers are assured USDA’s 2021 soybean yields won’t doubtless depart drastically from 2020’s yield of fifty.2 bpa. The Farm Futures survey discovered 41% of surveyed growers count on the ultimate tally for 2021 soybean yields to vary inside 1 bpa of fifty.2 bpa, with a further 33% anticipating not more than a 3 bpa yield adjustment for the 2021 crop.
Farmers count on to see extra variance from USDA’s 2021 corn projections relative to these of 2020 by the point yields are finalized subsequent January. Solely 20% of respondents count on to see USDA revise 2021 yields 1 bushel greater or decrease than 2020’s yield of 172.0 bpa. One other 36% predict revisions to vary between 2-3 bpa. The rest anticipate revisions starting from 4-10 bpa.
New 12 months, new advertising plans
An unprecedented export season and rising home utilization charges has left little previous crop in bins throughout the countryside this summer time. Farm Futures readers report solely 7% of 2020 corn crops stay in storage (6% on farm, 1% off farm). Soybean shares are barely tighter at 6% (4% on farm, 2% off farm) remaining. Solely 4% of 2020 wheat provides had been left over as soon as harvest started earlier this summer time (3% on farm, 1% off farm).
Most growers should not seeking to modify current grain storage constructions subsequent 12 months as favorable foundation choices ease considerations about capturing storage premiums. Excessive building prices are doubtless one other issue holding again grain bin building in 2022. Solely 9% of survey respondents indicated they might add grain bins subsequent 12 months.
The vast majority of corn, soybean, and wheat growers count on to retailer their crops unpriced at harvest. Solely 13% of survey respondents indicated they might use places to guard unpriced saved grain forward of this fall.
However many have already priced crops for harvest supply. And whereas solely 3% of corn growers and 1% of wheat producers are doubtless to purchase again prior gross sales with futures or choices, a staggering 22% of soybean growers count on to make use of numerous hedging methods to seize pricing alternatives via the 2021/22 advertising 12 months.
Corn, soy, and wheat growers count on to have not less than half of 2021 crops offered by December 31, 2021. Soybean (58%) and wheat (63%) gross sales are more likely to be extra aggressive than these of corn (52%) by 12 months finish.
Futures worth expectations
In an period of tight provides, how do farmers suppose futures costs will reply within the upcoming 2021/22 advertising 12 months?
On the time the survey was carried out, new crop corn futures costs ranged between $5.00-$5.40/bushel. New crop soybean costs hovered between $12.90-$13.10/bushel throughout the identical time interval. And as harvest approaches, farmers should not precisely relying on a harvest worth rally.
About 66% of survey respondents anticipated new crop corn costs to be decrease than July costs by the tip of October 2021. One other 59% of Farm Futures growers anticipate soybean costs to be decrease by Halloween 2021 than in July.
However farmers are extra bullish about worth prospects because the advertising 12 months progresses. Survey respondents count on costs will rise by the start of 2022 with even greater hopes of higher costs by the tip of March 2022 in comparison with July 2021 costs.
About 56% of respondents suppose that corn costs will likely be greater than July 2021 costs by New Yr’s and 65% consider costs will likely be greater by the March 31, 2022 Acreage Intentions report. Soybean growers are extra optimistic about costs as provides tighten, with 61% of survey respondents anticipating greater soy costs by January 2022 and 63% anticipating soybean costs to be greater than these of July 2021 by the tip of March 2022.
Earnings maintain regular regardless of greater inputs
Farmers anticipate one other 12 months of robust commodity costs to buffer profit outlooks in 2021/22. Within the August 2021 Farm Futures survey, 39% of respondents don’t count on income in 2022 to vary considerably from these recorded in 2021. Solely 29% of surveyed growers count on profit margins to extend 12 months over 12 months in 2022.
However 32% of farmers consider income will fall in 2022 in comparison with 2021. Of these growers anticipating losses, 85% cited excessive enter prices as a number one issue for decrease income subsequent 12 months. And farmers should not anticipating enter costs to go down anytime quickly.
About 87% of surveyed producers count on that enter costs will likely be greater in Spring 2022 in comparison with Fall 2021, lowering the probability that farmers will delay 2022 fertilizer purchases till subsequent spring. That would put strain on ag retailers this fall if extra growers resolve to use vitamins following harvest as a substitute of later subsequent spring.
Over 92% of respondents anticipate greater nitrogen costs subsequent 12 months. Growers count on the most important worth improve to be seen in phosphate fertilizers as commerce flows proceed to regulate to the countervailing tariffs dispute between the U.S., Russia and Morocco.
Farm Futures survey respondents count on a mean improve of 26% for phosphate costs in 2022 as phosphate shares proceed to stay tight and manufacturing prices improve.
Inflation stays a key concern
Farmers overwhelmingly count on greater prices of working and overhead in 2022 in comparison with 2021. Whereas 41% of respondents consider the Federal Reserve will go away rates of interest unchanged in 2022, 57% suppose that the Fed will increase charges to fight rising inflation.