KANSAS CITY — If farmers plant as much corn as indicated in the March 31 US Department of Agriculture’s Prospective Plantings report, and if ethanol producers use as little corn as forecast in the USDA’s April 9 World Agricultural Supply and Demand Estimates report, US carryover may top 4 billion bus in 2021, and corn futures may dip below $3 a bu.

The USDA said farmers indicated they intend to plant 96,990,000 acres of corn in 2020, up 7,290,000 acres, or 8%, from 2019. The number was above the high end of trade expectations that averaged 94.3 million acres. If realized, it would be the second largest corn planted area on record after 97,291,000 acres in 2012.

The impact of the corn planting number was mitigated somewhat by the USDA’s March 1 corn stocks estimate of 7,952,508 bus, which came in below the average of trade expectations.

Most in the trade doubt that 97 million acres of corn will be planted as the price outlook for corn grows more bearish as planting time nears in key growing states, and as the value of soybeans in relation to corn improves, possibly making soybeans more attractive for farmers who are able to switch crops so close to planting time.

The USDA, in its weekly Crop Progress report, said an aggregate 3% of the corn crop had been planted in the 18 major states as of April 12, even with a year ago and just behind the 2015-19 average of 4%. Of the key corn growing states, only Illinois and Indiana at 1%, Missouri at 4% and Kansas at 6% had corn in the ground.

“I was surprised,” Paul Meyers, vice president of commodity analysis, Foresight Commodity Services, Inc., said concerning the Prospective Plantings corn acreage number. He noted that the farmer survey for the report was conducted by the USDA before the impact of the coronavirus had been fully realized, and that the plunge in ethanol prices and production had not yet occurred.

Those events were at least partially reflected in the USDA’s April WASDE report, which projected the use of corn to manufacture ethanol at 5,050 million bus in 2019-20, down 375 million bus, or 7%, from the March projection and down 328 million bus, or 6%, from 2018-19, “based on data indicating an unprecedented decline in ethanol production and motor gasoline consumption as the result of COVID-19,” the USDA said.

Ethanol futures traded at the CME Group have hit record lows since COVID-19 slammed the transportation industry, and since Russia and Saudi Arabia got into a crude oil production/price war in March, contributing to an oversupply of crude at a time when demand was plummeting, driving crude oil prices to 18-year lows near $20 per barrel. US fuel demand has dropped an estimated 30% to 50% or more as Americans shelter at home during the pandemic. A much-anticipated meeting over Easter weekend between most of the world’s major oil producers resulted in an historic agreement to cut oil production 9.7 million barrels per day, but crude oil futures moved still lower on ideas the cut will not be enough to reduce the global supply glut or to offset reduced fuel demand stemming from COVID-19.

“The USDA was aggressive in its reduction of corn used for ethanol,” Mr. Meyers said. At the same, “ethanol use (of corn) could still be too high,” he said.

Ethanol producers have shut plants in at least a dozen states in recent weeks as demand and prices plunged. Weekly production has dropped to near a decade low, and stocks were record high, Energy Information Administration data showed.

The USDA projected the feed and residual use of corn at 5,675 million bus in 2019-20, up 150 million bus from the March forecast. Some in the industry question that increase as the USDA also lowered from March its forecasts for US red meat and poultry production and exports because of uncertainties about the impact of COVID-19 on global demand. And numerous meat plants are closing as workers test positive for COVID-19. That could drive meat prices higher, and curb demand, Mr. Meyers suggested.

“An expectation of reduced meat demand, a lower livestock supply and lower feed demand, in general, for the latter half of 2020 seems reasonable,” said Todd Hubbs, an agricultural economist at the University of Illinois in the farmdocDAILY newsletter, although he noted that lower outturn of distillers’ grain because of reduced ethanol production may be offset by increased use of corn. The USDA’s forecast for increased feed use of corn mostly was based on the lower March 1 corn stocks estimate.

Ethanol and feed use each account for about 40% of US corn production.

Exports remain one of the few bright spots in the corn market, with low prices helping offset a strong dollar. The USDA said US corn export sales in the week ended April 2 for delivery in 2019-20 were a marketing year high 1,848,900 tonnes. Sales for 2020-21 were 608,800 tonnes, including 504,000 tonnes to China. The USDA left its 2019-20 US corn export forecast unchanged from March at 1,725 million bus in the April WASDE report.

“There’s still uncertainty about exports,” Mr. Meyers said, noting a recent increase in corn sales and shipments, but increased competition from Brazil coming in June and July.

Mr. Hubbs agreed that recent strength in export sales was supportive, but that “a more robust pace is required to hit the current (USDA) forecast.”

Corn planted area of 97 million acres (equal to about 89 million harvested acres) and the USDA’s projected yield of 178 bus per acre could push production to about 15.8 billion bus in 2020.

Mr. Meyers sees corn area 1 million to 2 million acres below the USDA forecast, and average yield slightly lower at 177 bus per acre. He expects US corn carryover on Sept. 1, 2020, near 2.25 billion bus (above the USDA forecast of 2.1 billion bus), with potential total supply in 2020-21 around 18 billion bus. That could result in carryover of 4 billion bus in 2021 (record carryover was 4.9 billion bus in 1987).

Both analysts see the potential for corn to drop below $3 per bu.

“If corn acreage stays at 97 million acres, cash corn prices under $3 for large areas of the Corn Belt seem probable over an extended period,” Mr. Hubbs said.

Mr. Meyers said CME Group July corn has downside potential of 15 to 20 a bu and December (new crop) corn has a downside of 40 to 50 per bu, possibly dropping below $3 during the October-November harvest period, if carryover is at 4 billion bus. The July contract was near $3.32 per bu and approaching 3½-year lows, and the December contract was near $3.46 per bu midway through last week.

Analysts see corn usage and prices depending on economy recovery from COVID-19, with a tendency to a longer rather than a shorter recovery.