Other than the Trade War tariffs that Trump has put on China, a stronger U.S. dollar and now historical Midwest flooding is a real “triple whammy” for many U.S. grain farmers.
What is behind all of this wet weather? It is not just El Nino? Why some point to low solar cycles as being the main culprit, my view is that there is too much emphasis put into solar activity in forecasting long range weather. A warming planet and other teleconnections are at least as important. While low solar activity can create warming near the arctic and cause the Arctic Oscillation index to go negative, it has gone negative in many other springs, with a solar minimum–such as 1993
But what about farmers having to decide about planting in mud or crop insurance? Here is an article by Michael Cordonnier, written in mid May regarding Prevent Plant options for farmers.
Prevent Plant Options and U.S. Crop Acreage in 2019
As wet weather continues to delay planting across the Corn Belt, some farmers may be considering submitting a claim for “prevent plant” instead of actually planting their intended corn crop. Crop insurance is complicated and each farmer needs to do the calculations for his farm in order to determine if claiming prevent plant is a viable option. Without getting into too much detail (which by the way, I do not know much about), below I have outlined four broad options when it comes to claiming prevent plant.
If a farmer has not been able to plant his corn crop by the insurance date which varies by region, he/she has basically four options.
- Option 1 – Submit a claim to the insurance company that he was not able to plant due to excessive wet conditions. Once the claim is accepted, no other crop may be planted on that acreage other than an approved cover crop.
- Option 2 – A farmer may plant a second crop before the final planting date for the first crop. For example, if a farmer decides to plant soybeans instead of corn before the final planting date for corn, then the soybean crop will be insured instead of the corn crop.
- Option 3 – Submit a claim for prevent plant for corn and then plant soybeans on those acres. The payment for the corn crop will be reduced and the coverage for the soybeans will also be reduced as well.
- Option 4 – Plant the original crop during what is called the late-planting period. The late planted period lasts for 25 days after the final planting date for the region. If the crop is planted during this 25-day window, the insurance coverage will decline 1% per day during that period.
The question now is how many acres of corn and soybeans may eventually be claimed as prevent plant? The 5-year average prevent plant for corn is 1.4 million acres. In 2018 there were 0.9 million acres and the worst recent year was 2013 when there were 3.6 million acres of prevent plant for corn.
The 5-year average prevent plant for soybeans is 0.78 million acres. In 2018 there were 0.3 million acres and the worst recent year was 2015 when there were 2.2 million acres of prevent plant soybeans.
If we combine the two crops, there could be 5-6 million acres of prevent plant. If you add in wheat, where the 5-year average is 0.98 million acres, the total could be 6-7 million. These numbers do not include abandonment which would occur later in the growing season.
To make the decision on prevent plant even more difficult for farmers, the administration has announced that they intend to do another bailout of American farmers due to the ongoing trade dispute with China. If the next vote buying, sorry bailout, is skewed toward soybeans like the first bailout, it might encourage farmers to plant their soybeans even if it gets extra late to plant.
Prevent plant soybean acreage – The prevent date for soybeans is June 10th in Minnesota, the Dakotas, and Nebraska. The prevent plant date for soybeans is June 15th in Iowa and the northern third of Illinois and the prevent plant date is June 20th for 2/3 of Illinois, Indiana, Ohio, and most of Missouri.
At this point, I don’t think we can say anything definitive about the potential amount of prevent plant soybean acreage other than if the weather during early June continues to be excessively wet, some farmers might opt for prevent plant. (Michael Cordonnier)