Impact of COVID-19 on Agriculture

Harvest Outpacing Expectations

Market Intel / September 26, 2018

According to USDA’s September 24 Crop Progress report, the U.S. corn harvest, at 16 percent complete, is speeding along. Up  6 percentage points from the previous year and 5 percentage points from the five-year average, this  represents a total of 2.4 billion bushels harvested, Figure 1. Harvest progress for U.S. soybeans is also picking up steam, with 14 percent of the soybean crop harvested. Like corn, the soybean harvest is up from last year’s 9 percent and up 6 percentage points from the five-year average, representing 657 million bushels harvested, Figure 2.

The rapid harvest pace should continue as conditions remain favorable throughout the Corn Belt. This year’s crop conditions have also led to predictions of record-setting yields for both corn and soybeans. Though farmers in the Corn Belt have only just begun harvest, Illinois growers have already harvested 650 million bushels of corn, representing 28 percent of the harvest. Illinois corn producers’ harvest rate is up 18 percentage points from the five-year average and 15 percentage points from last year. Also in Illinois, 122 million bushels of soybeans have been harvested, representing 17 percent of the harvest. Not too far behind the corn farmers in the state, Illinois soybean producers’ harvest rate is up 11 percentage points from the five-year avearge and 9 percentage points from last year. 

For the week ending Sept. 24, USDA has revealed 69 percent of the U.S corn crop is in good-to-excellent condition, up 1 percentage point from last week. Current conditions remain improved over the five-year average of 67 percent good-to-excellent. Corn crops in poor-to-very-poor condition continue their five-week stretch at 12 percent. USDA’s estimates are slightly improved over analysts’ predictions of no change in corn or soybean crop conditions over the last week.

Like the U.S. corn crop, 68 percent of soybean crops are in good-to-excellent condition, up 1 percentage point from last week. Current conditions are up 8 percentage points from last year and 5 percentage points from the five-year average of 63 percent in good-to-excellent condition. Soybean crops in poor-to-very-poor condition have also remained steady at 10 percent. 

Megan Nelson
Economic Analyst
(202) 406-3629

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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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