West Lafayette, Indiana, USA
April 1, 2016
U.S. farmers reacted to global markets in making a major shift by intending to plant more acres in corn this year than last, a situation that could add to abundant supplies and result in lower prices for producers, Purdue University agricultural economist Chris Hurt says.
Farmers indicated in a U.S. Department of Agriculture survey they would plant 6 percent more acres of corn this year - 93.6 million, the most since 2013 and the third highest since 1944 - because of a world surplus of wheat and reduced sorghum demand from China.
Farmers expect to reduce their acreage of both wheat and sorghum and replace it with corn and cotton. Cotton acreage would increase by 11 percent.
"The bottom line is that 93.6 million acres is too much corn acreage that with normal yields will cause further building of already-large corn inventories," Hurt said. "Production would be expected to move above 14 billion bushels, with corn prices at harvest falling to the lower $3 per bushel."
The reduction in wheat acreage is related to low prices from the surplus of that crop and increased international competition. The lower demand for sorghum is the result of reduced use in Chinese feeding rations, causing sorghum prices to drop relative to corn.
The shift is less apparent in the Corn Belt. Still, corn there could increase by 1.5 million acres. Somehow, Hurt said, farmers in the Corn Belt also are going to plant 840,000 more acres of soybeans, and more wheat acres as well. This made Hurt wonder whether farmers might have over-estimated their total acreage numbers.
The Prospective Plantings report of the USDA's National Agricultural Statistics Service, released Thursday (March 31), is based on a nationwide survey of 83,000 farm operators. It was conducted in the first two weeks of March.
The estimated corn planting area nationally is up 6 percent from last year's 88 million acres. Indiana farmers indicated they would plant 5.8 million acres in corn, up 3 percent from 5.65 million last year.
Soybean farmers nationally intended to plant 82.2 million acres, down less than 1 percent from 82.6 million from last year. Farmers in Indiana planned the same amount as last year: 5.5 million acres.
Hurt said soybean stock supplies were about 40 million bushels lower than expected, indicating that more soybeans might have been used than expected or the size of the 2015 crop was over-estimated. In addition, soybean acreage nationally was 660,000 acres smaller than pre-report estimates. This means, Hurt said, that the 2016 crop would have U.S. average prices near $9 for the marketing year.
"These reports together suggest that the market prices of corn and soybeans will now adjust to give producers reduced financial incentives to plant corn and increased price incentives to plant more soybeans, spring wheat and other spring-planted crops," he said.
Hurt noted that spring weather also will be important in determining how many acres get planted to each crop. The weather has tended to favor an early start to the planting season, which generally favors corn acreage.
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PLANTINGS BY THE NUMBERS:
* Corn nationally: The highest planted corn acreage was 113.02 million in 1932. The closest it has come since then was in 2012, when 97.29 million acres were planted. Planted acres have exceeded 90 million acres 21 times since 1926 but only five times since 2007. The other 16 times occurred between 1926 and 1944.
* Indiana corn: Highest planted acreage: 6.5 million in both 1976 and 2007. At least 6 million acres have been planted 14 years since 1926 but only twice since 2007 (2012 and 2013).
* Soybeans nationally: Highest planted acreage: 83.27 million in 2014. In 2015, planted acres were slightly less (82.65 million). Planted acres have exceeded 70 million every year since 1997 except in 2007 (64.74 million). Before 1997, planted acres exceeded 70 million acres nationally only twice, in 1979 and 1982.
* Indiana Soybeans: Highest planted acreage: 5.8 million in 2002. The first time Indiana saw 5 million acres in soybeans was in 1995, and it has remained at least that high every year since then except in 2007 (4.8 million).
Source: USDA's National Agricultural Statistics Service.
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