As extreme volatility continued in the commodity markets this week, USDA gave its first taste of 2022 planted acreage estimates during the Ag Outlook Forum. USDA pointed to a bump in corn acres, but a slight drop in the number of soybean acres planted this year.
USDA Chief Economist Seth Meyer’s official estimates point to 92 million acres of corn and 88 million acres of soybeans. If realized, the agency’s initial projections means U.S. farmers will plant 0.8 million more acres of soybeans this year and 1.4 million fewer acres of corn. And as volatile prices continued to stronghold the markets to close out February, farmers are busy finalizing planting plans this year.
Related story: USDA Anticipates 92 Million Acres of Corn, 88 Million Acres of Soybeans
“I think what’s going to happen here is we’re not going to see those acres shift off of corn,” says Kristy Van Ahn-Kjeseth, Van Ahn and Company. “But Minneapolis wheat, we really need to get up and moving if it wants to make something of itself and find some of those acres. Otherwise, soybeans are looking very, very profitable.”
Van Ahn Kjeseth says basis is also becoming a factor into acreage decisions this year.
“Not only do soybeans look profitable, but around North Dakota and South Dakota, we have some phenomenal basis levels already for harvest delivery beans, and that’s like the golden ticket along with your good futures prices to have that strong basis to kick it off right out of harvest,” she adds. “So, I do think those beans are gaining some acres on spring wheat. I’m not so sure they’re taking them away from corn though.”
USDA Chief Economist Seth Meyer discusses key insights from the Ag Outlook Forum.
Where’s the Wheat?
USDA’s acreage estimates this week pointed to a 1.3% increase in wheat acres compared to 2021. However, there’s concerns about what the spring wheat picture may actually turn out to be.
As farmers work to finalize planting decisions in North Dakota and South Dakota, Tregg Cronin, a grain market analyst and farmer in South Dakota, says he doesn’t think spring wheat is buying any acres, nor is it stealing any acres at this point.
“A lot of the misconception is that well, wheat takes less nitrogen than corn does, but that’s not the case if you’re going for top end yields and top end quality,” says Cronin. “So where futures prices stand today, spring wheat is kind of on the verge of losing a few acres which coming out of the drought last year, and looking at the balance sheet headed in, it doesn’t have any acres to give away. So, spring wheat could be a sleeper down the road.”
Input Issues
Input availability is creating another question mark in the acreage debate this year. Josh Linville of StoneX Group says while prices could fluctuate, he says sourcing additional supplies isn’t an option this close to spring.
“Unfortunately, the window is closing too quickly when you start looking at the fact we would need to bring more imports in order to increase the supply. And we would have to bring that from overseas. But unfortunately, if you had a ship ready to roll today, from the Middle East, for example, on urea, you’re talking 30 days of sail time to get to the Gulf, then you got to unload into barges. And you probably have at least another 30 to 45 days to get that up the river system into the terminal and out to the farm. By the time you start talking those types of logistics, that’s May. So it’s getting be very, very late.”
Van Ahn-Kjeseth says she’s not in the camp that farmers will make last-minute acreage adjustments based on availability. Instead, she points out spring crop insurance prices, which are being set this month, is providing a strong risk management tool this year.
“Right now, I think people are set on what they want,” she says. “And I think they kind of have that game plan going on crop insurance prices extremely strong right now. So, you’re generating those spring crop insurance prices, to give you a little bit more comfort to say, ‘hey, let’s just stick with the plan.’ We know the 2023 crop could be a much different situation. But this one is penciling to give you some comfort to start it off.”
Soybean Demand in Question
USDA also boosted U.S. soybean demand due to issues with the South American crop, but didn’t acknowledge the potential for demand from renewable diesel. Even with renewable diesel and the potential demand boon it could provide for soybeans, Cronin is cautious that too many soybean acres this year could produce an oversupply of soybeans in 2022.
“I would say that we’re probably plus or minus 90 million acres of soybeans [is the threshold]” he says. “I think on the under 90 million, we probably have demand for most or all of those soybeans. You get over 90 million, and there’s probably excess beans around provided we raise the crop that we’re expected to. So, I would say the line in the sand is probably 90 million, in my opinion.”
