2022 Acres: The Big Swap to Soybeans
Producers told USDA’s National Ag Statistic Service (NASS) they intend to plant nearly 3.9 million fewer acres to corn in 2022 than they did last year. The survey suggests soybean acres this year will be up 3.8 million from 2021.
Traders expected corn acres to be down from a year ago, but at 89.49 million, corn planting intentions are 2.5 mil-lion below the average pre-report trade guess. Traders expected soybean acres to be up from a year ago, but intentions topped the average estimate by 2.2 million.
THE BELIEVABILITY FACTOR
It was the “big swap” many didn’t expect. What makes it believable is total corn and soybean acreage intentions of 180.5 million is nearly unchanged from 2021. Plus, consider the meteoric rise in corn’s input costs from a year ago.
Doubters of the big swap point to agronomic reasons. The NASS survey suggests at least some growers have decided to bust rotations with soybean acres estimated above corn plantings in states such as Illinois, Indiana and Minnesota. Despite the rise in costs, corn profitability for most growers likely increased more than it did for 2022-crop soybeans.
There are many other theories to support the big swap:
- Increased rootworm pressure might have pushed some growers away from corn-on-corn.
- The buildup of the renewable diesel story and the eventual need for more soybean acres.
- Potential “home run” soybean yields on ground that had been corn-on-corn for years could beat corn’s profit potential.
The day after the March 31 Prospective Plantings report, the soybean:corn price ratio fell to 2.04:1 from 2.36:1 on March 1. The underperformance of November 2022 soybean futures in relation to December 2022 corn futures signals the soybean market is attempting to slide some acres back to corn.
CARRYOVER CONCERNS
The result of multiplying the 89.49 million corn acres with a trend line (and record) national average yield projects a new-crop corn carryover of under 1.2 billion bushels.
The outlook for soybeans has less clarity. The 90.96 million acres and a national average yield of 52 bu. per acre would produce a crop about 250 million bushels bigger than last year. If beginning stocks are 285 million bushels (from the March WASDE) and use equals this year’s estimated 4.4 million bushels, carryover in 2022/23 would climb past 500 million bushels.
But if beginning stocks fall to 250 million bushels and next year’s use returns to 4.5 billion, carryover would be 425 million bushels.
The outlook for corn is not negative, but it’s difficult to predict prices above $7 in new-crop futures — unless Brazil’s second-crop of corn falls short of expectations or if Ukrainian exports are “mostly” moved to U.S. origin.
It’s difficult to build a bullish outlook for soybeans. But price pressure should be limited by U.S. production uncertainty, domestic demand and the opportunity for increased soy oil demand to offset lost sunflower oil supplies from Ukraine and Russia.
