USDA’S corn-crop estimates hammer prices
American farmers already stung by President Donald Trump’s trade wars now face billions of dollars in potential losses as controversial data from the U.S. government snuffs out a rally in corn.
The Agriculture Department said Monday that farmers planted a bigger corn area than analysts estimated, and it pegged crop yields that also exceeded expectations, sparking the biggest rout in future prices since 2013.
That was a blow to growers who were holding back supplies in hopes that a rally that started in May due to delayed sowing would extend through the fall.
The decline represents a potential loss of almost $3.5 billion for U.S. farmers, according to the American Farm Bureau, and it is another setback for them after prices fell in the wake of the USDA’S previous acreage report, which was widely criticized for containing outdated data.
The latest data is compounding the pain from the trade war between Washington and Beijing, which has significantly reduced purchases by the world’s largest soybean buyer. Policy uncertainty also has hit the farm economy as a new U.S. trade deal with Mexico and Canada has yet to be passed. What’s more, the government is allowing 31 oil refineries to go without blending ethanol into fossil fuels, hurting demand for corn.
“This is a huge disappointment for farmers that have already been struggling with Corn kernels are dumped into a grain cart in Delaware County during last fall’s harvest.
a lot of uncertainty with this corn crop, trade wars and what have you,” said Tanner Ehmke, manager of the research team at Cobank, a $138 billion lender to the agriculture industry. “A lot of people were banking on the opportunity to sell at much higher prices. This report now really brings that
into question.”
Crashing corn prices are an additional stress for growers facing huge farm debt, which the USDA estimates will rise 3.9% this year to $427 billion. Last year, farm debt-to-income was at the highest level since 1984.
The USDA pegged planted corn acres at 2.6% more than expected, while projected yields came in 2.8% above. Growers who were already disappointed by the price declines after the previous acreage report had hoped the agency’s rare re-survey of plantings would deliver a number that better reflects one of the wettest planting seasons on record.
Soybean acres were below forecasts, although yields were higher.
“I still don’t think anyone has a good, firm handle on acreage yields, and demand, especially not USDA,” said Charles Williams, who farms 13,000 acres with his father and cousin in Marion, Arkansas. “There’s a lot of calendar left to go on this crop, and I don’t know if the market will know what we have until we throw it in a pile, so to speak, at harvest.”