All eyes will be on USDA’s planting numbers on Thursday, March 31. Will acres swing hard to corn, soybeans or be split down the middle?
In its February Outlook Forum, USDA called for 92 million acres of corn, 88 million acres of soybeans and 48 million acres of wheat. Ahead of Thursday, analysts are sticking pretty close to USDA’s first take on acres, with:
- 92 million for corn
- 88.7 million for soybeans
- 48 million for wheat
Yet the range of expectations from analysts are rather wide:
- Corn: 89.7 million to 93.5 million
- Soybeans: 86 million to 92.2 million
- Wheat: 45.9 million to 48.9 million.
See: Compare and Contrast: Acreage Predictions Roll In
The Prospective Plantings report is always known for a surprise or two. What could be on tap this year? Analysts share their thoughts.
1. A much larger corn acreage number.
As fertilizer prices soared to round out 2021 and into 2022, the chatter began that acres would tilt toward soybeans. Bailey Elchinger, risk management consultant for StoneX Group, doesn’t think there will be major shifts this year, despite the fertilizer and chemistry scenario playing out.
“I’m not in that camp,” she says. “You look at west of the Mississippi, we had a record anhydrous run last fall. So those acres are probably locked into corn, barring a Mother Nature situation changing that. I think we’re probably close to that 91 million acres of corn, 89 million beans, potentially a little bit more corn, depending on how many we can pull from cotton.”
A much larger corn acreage number would be a surprise, she says.
“Do they come out with 93 or 94 million? Do they drop that bean acre number based on $6 corn futures? Nothing would surprise me in 2022,” Elchinger says.
Read More: Less Than a Week Away from USDA’s Official Acreage Survey, Yet That’s Not What’s Moving the Markets
2. A bearish market reaction.
Jerry Gulke, president of the Gulke Group, is expecting the report to be bullish, regardless of what the number says.
“The only one caveat out there is one firm has been predicting a 5-million-acre increase in soybeans,” he says. “But if 5 million more acres come in, they probably wouldn’t be high-quality acres.”
Even with a jump in U.S. soybean acres, South America has lost more than 1 billion bushels of soybean production between Brazil and Argentina.
“If you increase 1 million acres, that’s about 50 million bushels of soybeans,” he says. “But if you increase 1 bu. per acre, that’s about 89 million bushels. So, it will be really important we get a good yield on all the acres we plant.”
Expect volatile markets the minute the reports are issued, Gulke says.
Read More: Jerry Gulke: Will Governments Interfere with Price Volatility?
3. Former production acres return.
Possible wild cards include acres that have not been in production the past few years could come back into production.
Jim McCormick, hedging strategist for AgMarket.net, is expecting this acreage mix for 2022:
- Corn: 90.7 million
- Soybeans: 89.8 million
- Wheat: 48.3 million
His firm has the opinion soybean acres will be much closer to corn than what farmers saw in 2021 due to excessively high fertilizer costs and excellent soybean prices.
“We are not anticipating a significant adjustment of secondary crop acreage,” he says. “A possible wild card includes acres which have not been in production the past few years come back into production.”
4. No surprise at all.
Jon Scheve, president of grain for Superior Feed Ingredients, is expecting 92 million to 92.25 million corn acres and 88 million to 88.25 million soybean acres to be projected by USDA.
“Spring wheat values have not kept pace with corn, beans, canola or even oats,” he says. “This could suggest a slight drop in spring wheat acres. However, considering spring wheat is a grass and where it is produced, it would seem likely that corn or oats would be the replacement crops.”
Cotton values are good, Scheve says, so there could be an increase in cotton acres this year. Also, with dry conditions in the Southern Plains, farmers there might switch some acres from corn to milo because of better drought tolerance.
“The wild card may be no surprise at all,” he says. “The trade often builds up these reports for big surprises in potential price movements. Ultimately, if the reports are what is expected, it may be a letdown. The market may be expecting too much from this report, so I could see the market responding to a neutral or even slightly bullish report with a small price pullback.”
Long term, Scheve says, the market will need normal weather conditions during the growing season or prices will need to trade higher to ration demand.
