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July 10, 2012

2012 U.S. Harvested Acreage Trimmed due to More Abandonment

Corn - I have been estimating that the U.S. corn harvested acreage would be 88.5 million acres or 300,000 less than what was reported in the June Acreage Report, but the amount of abandonment is now increasing due to the drought and the harvested acreage is declining. As a result, I have lowered the corn harvested acreage another 200,000 acres to 88.3 million acres, which is now 500,000 less than the June Acreage Report. If this weather pattern doesn'at change soon, the corn harvested acreage will continue to decline.

In times of flooding or excessive rainfall, the USDA usually conducts special acreage surveys for the August Crop Report in an attempt to accurately assess the acreage losses due to the adverse conditions. Although the USDA has not announced that they will conduct a special acreage survey for the August Crop Report, I think there is a good probability that they will do something extra to try to assess the damage. There have already been reports of farmers calling their crop insurance agent to zero-out the field in order to collect insurance and I am anticipating we will hear many more such stories in the coming days.

Soybeans - For soybeans, I had been estimating that U.S. farmers would harvest 74.0 million acres, or 1.3 million less than the June Acreage Report. The lower acreage was the result of less than expected double crop soybean acreage and increased abandonment. I think the situation for the soybean crop has now gotten even worse.

In the northern double crop soybean areas, the amount of rainfall over the last several weeks has only been a fraction of normal and the temperatures have been all-time record highs. I now think the amount of abandonment will be even higher than anticipated earlier and the amount of double crop soybeans will be lower than anticipated earlier. As a result, the soybean harvested acreage has been lowered another 200,000 acres to 73.8 million acres which is now 1.5 million less than the June Acreage Report.

For those of you who have been reading these reports over the years, you know that I like to step-things-down or step-things-up on a weekly basis depending on the conditions in the field. The acreage reductions that I am using this week may not be the last. If the corn crop continues to suffer, more farmers may opt for insurance payments instead of the risk for very low yields. For the soybean crop, I think the biggest risk is for increased abandonment of the late-planted double crop soybeans which are certainly getting off to a poor start.