Up to Their Waists in Water, U.S. Farmers Face Crucial Decisions

March 28, 2019

For American farmers already struggling to navigate the U.S.-China trade war, optimism for the spring planting season is washing away.

Floods from the Mississippi Delta to the Dakotas have inundated roads and submerged fields just as Midwestern farmers should be preparing the soil to sow this year’s seeds. If land is inaccessible much longer, growers will be forced to shift their planting decisions — likely leading to more soybeans, the crop hit hardest by a drop in Chinese demand.

“It’s causing a lot of stress,” said Dan Nerud, who farms 2,600 acres of corn and soybeans in Nebraska with his son. Some of his land was under as much as four feet of water, while other areas are so saturated that walking or towing a planter with a tractor would mean sinking deep into mud.

The timing could hardly be worse for farmers who had been trying to figure out which mix of crops would yield the most profit as trade tensions drag on. President Donald Trump’s tit-for-tat tariffs with China, historically one of the biggest customers for U.S. agricultural goods, has roiled a market already depressed by years of ballooning supplies. Growers, waiting for sales to recover, are sitting on record inventories of soybeans packed away in silos and grain bags.

The storm deluge means that at least some of those oilseeds and stored grains may have been destroyed. Crops have flowed out of busted containers, but another concern is what can’t be seen, said Kelly Brunkhorst, executive director of the Nebraska Corn Growers Association. Damage from moisture that’s seeped into bins may not be evident for weeks and leave supplies that farmers have to discard.

‘Huge Impact’

Nebraska, among the hardest-hit states, is estimating $440 million in crop losses from flooding. That includes transportation costs, grain ruined in storage and planting delays, according to Governor Pete Ricketts. Another $400 million in livestock is expected to be lost from the recent rains and a blizzard earlier this month, he said.

“It has had a huge impact on agriculture,” Ricketts said in an interview. “It is definitely going to hurt farm incomes, and that’s ultimately going to be reflected in our state’s economy as well.”

After a long, cold winter, planting preparations were already behind schedule, Ricketts said. Now, many farmers have to deal with sand and even blocks of ice that may delay the growing season even more.

That’s limiting the options farmers have in choosing between corn or soybeans, the nation’s two largest crops. They are often planted on side-by-side fields and compete for acreage.

Despite the trade tensions, soybeans may win some acres that weren’t expected just months ago. The short fall season robbed farmers of enough time to apply nitrogen-based fertilizer that’s necessary for corn, and the storms have narrowed the application window this spring, said Alexis Maxwell, research director of Green Markets, a fertilizer research firm owned by Bloomberg LP.

As of last week, soybean acres were expected to fall by about 3 percent to 86.2 million this year, while corn acres would rise 2.4 percent to 91.3 million acres, according to a Bloomberg survey of analysts. The U.S. Department of Agriculture will release an updated forecast based on farmer surveys on March 29.

Changing Expectations

Nerud, president of the Nebraska Corn Growers Association, had planned to have corn on 60 percent of his acres and soybeans on 40 percent. The moisture left behind by snow this winter and more recent storms may lead him to flip those plans. If fields don’t dry out fast enough to apply fertilizer for corn, even the varieties that can grow in as few as a 100 days, he’s going to have to turn to beans.

During the winter, the market assumed farmers would plant about 95 million acres of corn this year, said Ed Prosser, vice president of commodity risk management at grain handler Scoular Co. He estimates it will now be closer to 90 million to 91 million.

“The floods are absolutely devastating for those affected but likely won’t have a significant impact on overall market prices,” Prosser said. More important “will be timing of when producers can get their fall crops planted. Fast means more corn, slow means more soybeans.”

Nebraska farmer Brandon Hunnicutt had planned to sow about 5 percent more corn this year at the expense of soybeans in his fields near the village of Giltner. His farm was largely spared from damaging floodwaters, but with fields still saturated, he doesn’t know if he will be able to plant all of his seeds this spring. He hasn’t gotten all the necessary chemicals ready in the soil for corn.

“Even before the flooding happened, there was a lot of fieldwork that didn’t get done last fall,” Hunnicutt said. “It’s a weird situation. Things are wide open this year.”

Narrowed Gap

The math may not be too bad for soybean planters, regardless of the weather. Even as tariffs have walloped exports of the oilseed, the price ratio between the two commodities only slightly favors corn, said Corey Jorgenson, president of The Andersons Inc.’s grain unit. Soybeans have rebounded somewhat as China made goodwill purchases during the trade talks.

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Plus, the cost of planting corn is much higher than for soybeans since the grain needs more fertilizer and chemicals, so profits may not be big enough to squeeze out the oilseed.

For some farmers, the issue may not come down to what to plant, but whether they can get into fields at all. Iowa State Representative David Sieck, who farms 1,200 acres with his brother and son, has lost 6,000 bushels of corn in bins due to rising water over the last week. About 200 acres of soybeans that were left unharvested from the fall have also been destroyed. With the possibility of even more flooding to come, he’s worried that nothing may be planted on part of his land this season.

“It’s terrible in my district,” Sieck said. “They are showing so much water coming at us.”

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