2019 South Dakota crop analysis: One for the record books
Mitchell, S.D. — 2019 was a record year for Prevented Planting acres across the United States. However, South Dakota had far and away the most prevent plant acres in the nation at over 3,900,000 acres. It was a year many of the state’s farmers hope to put behind them as the weather challenges and commodity price swings were amplified with so much national and global uncertainty. With a great deal of prevent plant acres in the state, the data for traditional crops in the annual report had fewer instances than in years prior.
Alfalfa, though not as prevalent as corn or soybeans, was the most profitable of crops produced on farms enrolled in the South Dakota Center for Farm/Ranch Management program. A yield of 3.16 tons/acre valued at $116/ton generated a net return of $74/acre. Bear in mind that the establishment cost of this perennial crop is quite substantial, but when spread over multiple years it makes the annual input cost lower than row crops. Excess moisture produced adequate growth where not flooded, but often the quality suffered by harvest delays.
What corn did get planted fared pretty well considering the conditions. An average yield of 154 bushels per acre against the average total cost of production of $506/acre, generated a net return of $62/acre. The value per bushel was based on a combination of forward contracting, harvest price and ending inventory for each farm. The cost per acre was $69 higher than 2018. Some factors contributing to that were:
1. Cost of products applied to fields that had some acres unable to harvest.
2. Higher cost of drying and handling the grain.
3. Overhead expenses had fewer acres to be allocated over.
The marketing “year” for the 2019 crops has seen many huge impacts already. A rally during planting season supported prices, then acreage reports throughout the year (that many considered incorrect) dampened rallies. Poor harvest conditions and a crop that has been difficult to dry and store has produced further challenges.
With the current low oil prices and a corresponding lack of ethanol demand, corn prices have tumbled in March 2020. “The current economic downturn caused by the Covid-19 pandemic has had many commodities in a tailspin but has recently improved to a roller coaster. I hope this (up and down vs. all down) can be considered somewhat of a positive,” states Will Walter, program director of the South Dakota Center for Farm/Ranch Management.
Soybeans averaged a net return of just $17/acre, down from $108/acre in 2018. The average yield of 48 bu./acre was down from 54 in 2018, plus the Market Facilitation Payment (MFP) in 2019 was spread out over additional crops rather than focusing on soybeans as in 2018. In addition to a drastic reduction in exports to China from the Trade dispute, African Swine Fever (ASF) has caused huge losses in China’s swine population thus decreasing the consumption of soybeans. The long-anticipated rebound in Chinese export demand is now harnessed by these conditions. The total cost of production for an acre of soybeans was $307 down from $348 in 2018, but still in line with a 7-year average of $329/acre. Some soybeans were planted late affecting yield and some inputs may have been spared from the inability to apply due to weather conditions.
Crop insurance payments and the ability to plant, hay and graze some form of forage crop allowed the prevent plant acres to show a modest return of $64/acre on average. This can be quite variable between operations because of differences in land cost and whether anything but water and weeds existed on these acres. It certainly was not a windfall as producers pay an insurance premium each year hoping not to need it.
With a much smaller subset of data than corn and soybeans, the average return per acre of winter wheat was -$28/acre. The average yield was 57 bushels/acre which has been consistently disappointing for the past 3 years. Some fields had portions either winter-killed or drowned out in the early spring flooding. In past years, such fields may have been terminated and planted to an alternative crop if conditions would have allowed, but in the spring of 2019 having any crop at all growing in a field looked positive. Other crops, with lower instances, often are unique to a small group of operations. All crops can be viewed via the South Dakota Annual Report at www.sdcfrm.com.