For months, traders debated which crops U.S. farmers would sow this year. That discussion is now turning to how many acres may be left unplanted as relentless rainfall sweeps the Midwest.
Rabobank is predicting an unprecedented number of unplanted acres of corn, the most widely grown American crop. A Bloomberg survey of 10 traders and analysts indicates growers could file insurance claims for about 6 million corn acres they havenโt been able to sow, almost double the record in 2013.
Corn futures surged more than 20% to a three-year high over the past few weeks on fears farmers wouldnโt be able to get seeds in the ground ahead of crop-insurance deadlines. So-called prevented plant claims reached 3.6 million acres in 2013, according to the U.S. Department of Agricultureโs Farm Service Agency.
Field conditions deteriorated over the past few weeks, indicating significant corn acreage loss was a risk, according to Gro Intelligence, a New York-based analysis firm that uses satellites among other data sources. Areas with the biggest risk of acreage loss were in central Illinois, Indiana and Ohio, and the region around the borders of South Dakota, Minnesota, Iowa, and Nebraska.
Such insurance claims are considered a last-ditch effort for farmers, who can receive about half of the value of their crop. Analysts in the Bloomberg survey cautioned estimates could still be skewed by the weather and the governmentโs market facilitation program, a $16 billion aid package to mitigate the impact of trade wars. Soaring corn prices could also prompt farmers to plant the crop without insurance.
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Sara Menker, chief executive officer of Gro Intelligence, said some areas could remain too wet to plant either corn or even soybeans. While the market is mostly focused on corn, traders โshould probably care about corn and beans in particular areas, because both could be decimated, even with the window not closing for beans,โ she said.
The top 25 counties at risk planted 3.7 million acres of corn in 2018, according to Gro Intelligence. In March, the USDA said U.S. farmers intended to plant 92.8 million acres of corn this year. The agency wonโt report prevented plant until August.
