The U.S. Department of Agriculture’s March 31 annual Prospective Plantings provide an early indication of what farmers intend to plant in 2015. While those numbers still may change (except for winter wheat), last week’s report offered some surprises.
The U.S.D.A. said U.S. farmers intend to plant 89.2 million acres of corn in 2015, down 2% from 90.6 million planted last year, 84.6 million acres of soybeans, up 1% from 83.7 million in 2014 and record high, and 55.4 million acres of wheat, down 3%.
Trade expectations (based on the average of more than 20 analysts surveyed by wire services) were lower for corn and higher for soybeans and wheat. Analysts’ expectations largely were based on price relationships of the three commodities leading up to the report, which tended to favor soybeans, or so most thought. The latest numbers compare with 89 million acres for corn, 83.5 million for soybeans and 55.5 million for wheat projected by the U.S.D.A. at its February Agricultural Outlook Forum.
Futures prices on March 31 reacted with sharp losses of about 14@19c a bu in corn and wheat and modest gains of about 5@6c a bu in soybeans, although prices rebounded on April 1 in what has been a market of wide price swings recently, especially in wheat. Bloomberg noted that wheat futures prices swung more than 3% four times in nine days the past couple of weeks for the first time since 2012. The quarterly U.S.D.A. Grain Stocks report (see “In The Spotlight” on Page 44), released at the same time, also played a role in futures price movement. That report showed March 1 stocks above expectations for corn, which tended to magnify the bearishness of the corn plantings number, but below expectations for soybeans, which conversely magnified the bullishness of the soybean plantings number, even if the latter was record high.
“If realized, this will be the lowest planted acreage in the United States since 2010,” the U.S.D.A. said. “The reduction in planted acres is mainly due to the expectation of lower prices and returns in 2015.” Planted area for corn is expected to be down across most of the Corn Belt except for Minnesota and Wisconsin, which are expecting increases, and Nebraska, which is unchanged, the U.S.D.A. said. The largest decline was 600,000 acres in South Dakota, the fifth largest corn producing state.
If one takes the trend yield used by the U.S.D.A. in its long-range outlook (167 bus an acre), and adjusts for harvested area (91.5% of planted area) potential 2015 corn production could be just over 13,600 million bus, compared with a record 14,216 million bus in 2014 and still the third highest on record.
Soybean production may approach last year’s record outturn if growers switch acres from corn (or other crops) to soybeans before final planting decisions are made, as many predict. Using the same approach as with corn, with soybean harvested area usually about 99% of planted area, and a trend yield of 46 bus an acre, production potentially could be around 3,850 million bus, compared with a record 3,969 million bus in 2014.
“Compared with last year, (soybean) planted acreage intentions are up or unchanged in 21 of the 31 major producing states,” the U.S.D.A. said. “Increases of 200,000 acres or more are anticipated in Arkansas, Iowa and Ohio. The largest declines are expected in Kansas and Nebraska.”
More is known about wheat acreage since winter wheat is planted in the fall. The U.S.D.A. unexpectedly adjusted winter wheat acres higher from the January Winter Wheat Seedings report. But the bigger surprises were for spring wheat and durum, which came in below expectations.
Again using a U.S.D.A. trend yield of 47 bus an acre with harvested area of 85% of planted area (it’s been lower the past few years), the planted area for all wheat could translate into a crop of about 2,200 million bus, but more likely closer to 2,100 million using 82% harvested area versus planted and a yield of 46 bus an acre.
Concerning winter wheat planted area, the U.S.D.A. said, “States with notable acreage increases from the previous estimate were Missouri, Montana and Oklahoma, while notable decreases occurred in Nebraska and North Dakota.”
Of spring wheat other than durum, the U.S.D.A. said, “Compared with last year, acreage increases are expected in the Pacific Northwest, as well as Minnesota and North Dakota. Decreases are expected in Montana, Nevada and Utah.”
And for durum, the U.S.D.A. said, “Planted acreage is expected to increase in all states except Idaho (where a record low is expected).”
Growers still have time to adjust their corn, soybean and spring wheat plantings, but not a lot. Those decisions will be evident in the U.S.D.A.’s June 30 Acreage report. The market now will focus on weather, which is expected to be favorable this year, with the exception of parts of the hard red winter wheat belt, especially Kansas.