Impact of COVID-19 on Agriculture

Harvest Climbs North

Market Intel / October 31, 2018

The harvest continues to climb north as USDA’s October 29 Crop Progress report revealed the U.S. corn harvest is 63 percent complete. Slowing slightly from its expeditious start, the corn harvest pace remains up from the previous year, representing an 11-percentage point increase. The current pace is right on track for the five-year average of 63 percent complete and down slightly from analysts’ estimates of 64 percent complete. U.S. corn growers have harvested 9.3 billion bushels so far this year. Iowa and Illinois growers are leading the charge, harvesting 2 billion and 1.3 billion, respectively. Figure 1 shows the state-by-state outlook for percent of corn acres harvested on the left and the number of corn bushels harvested for the week ending Oct. 28.

The Crop Progress report also indicates that the U.S. soybean crop is steadily moving, with 72 percent of harvest complete. In contrast to the U.S. corn crop, the U.S. soybean crop had a sluggish start due to rain delays and is currently down 9 percentage points from last year’s rate and below the five-year average of 81 percent complete. The current harvest rate is slightly outpacing analysts’ estimations of 70 percent complete for this week. Figure 2 outlines the state-by-state outlook for percent of soybean acres harvested on the left and the number of soybean bushels harvested for the week ending Oct. 28.

For the week ending Oct. 28, USDA reports that 32.5 million acres of winter wheat has been planted so far, with 22 percent of the U.S. winter wheat crop yet to be planted. The current planting rate is slightly lagging from last year’s planting pace of 83 percent planted. The bread basket of the U.S., Kansas, has planted 7.7 million acres of winter wheat so far. Oklahoma and Texas follow with 4.4 million acres and 4.5 million acres, respectively. Figure 3 illustrates the state-by-state look at the number of winter wheat acres planted as of the week ending Oct. 28.

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Following USDA’s March Prospective Plantings report, USDA’s June 30 Acreage report updated acreage expectations for the upcoming crop year. For the 2020/21 crop year, USDA now estimates corn planted area at 92 million acres, 3%, or 2.3 million acres, above prior-year levels. The revision is 5 million acres lower from March intended planting projections of 97 million acres, which was expected to lead to a record amount of corn production. Pre-report estimates had been calling for a reduction of 1.8 million acres, to 95.2 million acres of corn. Iowa leads the way in corn acres planted with 14 million acres, an increase of 4% compared to 2019. Illinois follows with 10.9 million acres of corn planted, up 4% from 2019, and Nebraska planted 9.8 million acres, down 3% from 2019. With 3.4 million acres, Ohio is expected to have the largest increase, 29%, in corn planted in 2020 compared to 2019. South Dakota follows with an increase of 24% in corn planting for 2020 compared to 2019 and Washington increases 18% in 2020 compared to 2019 corn planting. Figures 1 and 2 highlight USDA’s corn acres planted and the year-over-year change from 2019.

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Recent price volatility related to COVID-19, though not a new phenomenon, and a modification to milk pricing rules in the 2018 farm bill are now likely to result in negative or very low returns from FMMO revenue sharing pools, i.e., negative producer price differentials. These negative PPDs are expected to offset recent price increases in the dairy farmers milk check to the effect of $5 to $7 per hundredweight. Subsequently, these negative PPDs are likely to lead to large volumes of manufacturing milk being de-pooled from FMMO revenue sharing pools. Today’s article reviews negative PPDs and the current economic conditions that have resulted in low or negative producer price differentials and the de-pooling of milk.

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