CHICAGO, (Reuters) – U.S. farmers plan to plant their biggest corn acreage in eight years this spring, saying the grain is the best option in a tough farm economy despite weak demand from the biofuel industry as the COVID-19 virus spreads.
The U.S. Agriculture Department in its annual prospective plantings report, which is based on a survey of about 80,000 farmers taken during the first two weeks of March, on Tuesday forecast corn plantings of 96.990 million acres, topping already robust market expectations.
That means the U.S. market could be flooded with corn at a time American ethanol plants, which normally account for some 40% of U.S. corn usage, are closing. There is little demand for the biofuel that is blended into gasoline as Americans stay home.
Although the survey was taken before the rippling effects of the COVID-19 virus pushed corn futures to 3-1/2-year lows due to demand destruction in the ethanol sector, growers said they do not intend to change their plans.
“If you panic with every move, you are not going to be farming your whole life,” said Paul Berbaum, a farmer in Champaign County, Illinois, who plans his usual even split between corn and soybeans on his 550 acres (220 hectares).
Farmers say there are no safe alternatives given current market conditions. Crop insurance guarantees for both corn and soybeans, calculated based on price moves in February, were at four-year lows, and many other crops required investments in new equipment.
“I keep waiting for folks to cancel corn seed bookings but they haven’t,” said Chad Weckerly, agronomy manager at Hefty Seeds in Hurdsfield, North Dakota.
Declines in prices for fuel and fertilizer made corn cheaper to plant than in recent years, making it easier to fit into growers’ budgets. Additionally, farmers were worried that a switch to other crops would spark a rally in corn that they would miss.
“There could be changes (in corn acres) from other producers deciding to go to soybeans,” said Craig Frenzen, a farmer who devotes two-thirds of his acres to corn and the rest to soybeans. “If they do that, then I’m going to be the one staying status quo and benefit.”
And acres are not the only factor that determines prices. A few weeks of bad weather could spark a rally, farmers said, like in 2012 when a drought sent corn futures to an all-time high even after growers devoted their most acreage since 1936 to the crop.