USDA's acreage projections look familiar
Feb 21, 2014
Hello Pro Farmer Members!
Much of the attention at USDA's Ag Outlook Forum this week was on planted acreage assumptions for the 2014 crop year. USDA Chief Economist Joe Glauber made it clear ahead of time corn acreage would be down from the baseline projections released last week and soybean acreage would be up. And that's exactly what USDA did, lowering its corn acreage projection 1.5 million acres from the previous baseline figure, to 92 million acres, and increasing projected soybean acreage 1.5 million, to 79.5 million acres. If anything, the increase in the soybean acreage figure was friendly (yes, friendly) as it came in lower than many are projecting for the upcoming crop year. The real talk surrounding the acreage projections, however, was whether USDA has enough total acreage plugged into its assumptions. Total corn, wheat and soybean acres are projected to decline a net 1.1 million acres this year to 227 million acres.
That figure lines up with the total corn, soybean and wheat acreage tally we've been using at Pro Farmer Profit Briefing seminars this winter. In fact, our total for the three crops is just 900,000 above USDA's projections -- under our "average" weather scenario. We just get there with a little different mix (more beans, less wheat and and equal number of corn acres). If there's a question on USDA's acreage numbers, in my opinion, it's on the total for the eight major crops, which is forecast to decline to 253.8 million this year, the lowest since 2010. Lower prices will remove some of the "fringe" acres that came into production since 2010, but probably not quite as much as USDA is projecting. With that said, sharply lower price projections for new-crop corn and soybeans, don't favor these being the crops that potentially pick up a major amount of acres. In addition to prices, weather will have a say in the final acreage mix this year.
Speaking of weather... Did you see the government's forecast for spring? Below-normal temps are expected to be seen across the Upper Midwest for March through May. After the winter we've experienced, that should be a surprise to no one. But it the forecast materializes, there won't be a normal start to the planting season in this area again this year. Plus, with very heavy snowcover east of the Mississippi River, the eastern Corn Belt is looking at a potentially wet spring. It's hard to believe, but after last year, a late, wet spring may actually be seen as bearish. Of course, what traders may forget is the favorable weather around pollination and the extra three-plus weeks we had on the end of the growing season that allowed corn and beans to finish very strong.
The government's extended forecast also calls for above-normal temps to continue across much of Texas for March through May. If that's the case, it will increase moisture needs for a crop that's already reeling. After getting off to a strong start last fall, the HRW wheat crop has done nothing but go backward this winter. The situation isn't dire for the crop as whole, but timely spring rains will be needed (when aren't they?).
The SRW wheat crop isn't getting much attention as the HRW crop since most SRW states don't update crop ratings through the winter. But the harsh winter has also taken a toll on that crop, too. In talking with some SRW wheat growers this week at our Eastern Belt Profit Briefing seminar in Peoria, they questioned what shape the crop would be in when it breaks dormancy given the repeated attacks from Mother Nature. As one put it, "the wheat crop may have nine lives, but it's using them up this winter."
That's it for now...
... have a great weekend!
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