Prevent plant scenarios creep back in with clock ticking on northern U.S. -Braun

NAPERVILLE, Ill., May 26 (Reuters) - Cool and wet weather this spring have caused U.S. farmers to plant corn and other crops at a much slower pace than normal, though a recent pickup in progress ensures acres prevented from planting should be far lighter than in 2019, another very slow year.

But there is significantly less room in the balance sheets this year than in 2019 for any lost acres, which seems inevitable for North Dakota and northern Minnesota, where rains have been excessive and planting has moved at a snail’s pace.

North Dakota plants more than 23 million acres of principal crops annually, the country’s third-largest area behind Iowa and Kansas. The state grows half of the U.S. spring wheat crop, about 5% of the soybeans and 3% of the corn.

Although North Dakota’s role in corn production is small, U.S. farmers told the government back in March they would plant far fewer acres than industry analysts thought, a major reason why U.S. corn supplies over the next year are predicted to shrink to even tighter levels than today.

Wednesday was the final day for most North Dakota farmers to plant corn and be fully eligible for their elected crop insurance. They can either plant after that date with reduced insurance guarantees, plant something else or file a prevented planting claim.

Analysts pay close attention to the prevented planting (PP) data upon its first release in August to determine whether acreage estimates from U.S. Department of Agriculture’s June area survey are sound. However, the PP numbers may not inform too well on the possibilities by crop, especially in years with high prices.

As of May 22, North Dakota farmers had sown only 20% of their corn acres, by far the slowest pace ever. Spring wheat planting at 27% and soybeans at 7% are also record slow, though farmers still have two more weeks until the final soy planting date.

Northwest Minnesota is having similar planting problems. District-level production averages suggest the affected area of Minnesota grows more than 90% of the state’s spring wheat crop, a third of the soybeans and about 17% of the corn.

The Northern Plains are amid a warm and dry stretch now ahead of potential rain showers starting this weekend, and producers have gotten busy. However, the actual number of acres planted may not be decipherable in upcoming progress reports since switched or scrapped acres are figured in.

HIGHER PRICES, MORE ACRES

In years with a high amount of PP corn acres, the actual number of acres lost from original intentions is always lighter, sometimes by a wide margin. There are a few good examples, the best being 2019 where U.S. corn PP acres were a record 11.4 million, but final acres were only 3 million below intentions.

In 2011, some 3 million corn acres were claimed as PP, though final acres were less than a quarter million below intentions. Corn prices were high in 2011, and they rallied to multi-year highs in late spring 2019 when severe planting delays were revealed.

The only time corn PP and acres lost from intentions to final matched exactly was in 2020, when spring corn prices were at 14-year lows. Soybean prices fell to more than decade lows in spring 2019, and the actual acreage losses were substantially greater than PP soybean acres implied.

The reasons are variable and sometimes complex for why PP acres can be so different from the actual acreage changes, but one simple scenario might be where one farmer claimed PP and another actually increased acres of that crop.

Total U.S. PP acres hit a record 19.6 million in 2019, well above the prior high of 9.6 million in 2011. Farmers tallied 10.2 million PP acres in 2020, and all three years had persistent wet weather in common.

High prices do not prevent plentiful PP claims. North Dakota’s record PP acres were 4.5 million in 2011, when U.S. corn and soy insurance guarantees were record. Spring wheat prices were also high but not to the same degree, and wheat occupied a larger share of the state’s total PP.

Still, final North Dakota spring wheat acreage losses in 2011 were only half of what PP data suggested, and corn and soy losses were relatively light. Strong prices of all three competing crops this year combined with record planting delays for all could make it difficult to determine which crops North Dakota producers may abandon.

A unique factor that likely saved some acres in 2019 was that the USDA in late May announced an upcoming round of government trade aid related to the U.S.-China trade war. Those payments were advertised under a “plant-to-play” scheme, and many producers across the country planted in unfit conditions, afraid to miss out.

North Dakota was not the most delayed state in spring 2019, though planting was still slower and many corn acres were sown after the ideal window. Just over a third of the state’s corn crop was harvested by Dec. 1, 2019, when efforts should have been nearly finished.

Many North Dakota farmers harvested their 2019 corn in the spring of 2020, and those unpleasant memories may cause hesitation to push planting too late this year.

On the other hand, lofty prices and the "fear of missing out" could keep the planters rolling. Karen Braun is a market analyst for Reuters. Views expressed are her own.

(Editing by Matthew Lewis)