U.S. farmers who lag planting corn due to a soggy spring will still opt to seed corn rather than take an insurance payout or plant soy if their farms usually run high yields, a University of Illinois economist said June 3.
“Farms with higher expected yields will find planting corn more attractive than taking the prevented-planting payment,” Gary Schnitkey, University of Illinois economist and crop insurance specialist, told the Reuters Ags Forum.
“There is a great deal of looking at planting corn with shorter-season hybrids,” said Schnitkey. “As time passes, I would expect most farmers to pass on soybeans.”
Those decisions will be critical because U.S. corn stocks are projected to drop to a 15-year low by Aug. 31 due to heavy demand. Livestock producers, ethanol refiners and exporters are counting on the United States, the world’s top corn producer, to replenish inventories with a big 2011 harvest.
Corn Belt farmers can first decide by June 5 whether to claim a “preventive planting” insurance payout for corn. From that date, the clock starts ticking and farmers have another 25 days to decide whether to plant corn, another crop like soybeans, or to take the payout without planting.
“Of the three options, planting soybeans seems the least attractive from an economic standpoint in the eastern corn belt,” Schnitkey said in response to questions in the Forum, an online meeting place for the world grain industry.
“Options are the same for western areas, except they may be looking at a different crop than soybeans like spring wheat, although the later we get the more chance we have for a frost that could kill the crop.”
Acres planted after the deadline, which varies depending on location, will receive lower insurance coverage, i.e., payments are reduced by one per cent per day over the next 25 days.
Insurance companies cut coverage as corn yields typically slip at least one bushel an acre per day planted beyond those dates.
For soybeans, a later-planted crop than corn, the preventive planting dates are generally June 15 in the northern Midwest and June 20 farther south.
This year’s planting pace has been well behind most recent years as heavy snow-melt coupled with relentless rains, especially in Ohio and Indiana in the east and North Dakota in the western belt, have kept farm equipment in the sheds.
U.S. farmers still had 13 million acres of corn and 4.6 million of spring wheat to plant on May 29, a date when farmers are usually wrapping up corn and wheat seeding and turning to soybeans. Ohio’s corn-planting pace is the slowest in history.