July 9, 2018
2018 SOYBEAN ACREAGE SURPASSES CORN IN USDA REPORT
The late June USDA Acreage Report is always highly anticipated, because it becomes the first “hard data” after the March USDA Plantings Intentions Report to give an indication of crop production levels for a given growing season. Many times, the June USDA Report can have a big impact on grain market trends, either upwards or downwards; however, the 2018 Report did not seem to have much effect on either the corn and soybean market. Based on the June 29th USDA Report, producers planted more acres to both corn and soybeans, compared to the March Planting Intentions Report.
The biggest news in the June 29th USDA Report was that the number of soybean acres planted in the U.S. in 2018 will surpass total U.S. corn acreage for the first time since 1983. It should be noted that 1983 was the year that USDA implemented the Payment-in-Kind (PIK) program that paid farmers not to plant millions of corn and wheat acres, in order to reduce large U.S. grain surpluses. Soybeans were not part of the 1983 PIK program, so soybean acreage was not impacted.
USDA is currently estimating 2018 planted soybean acres at nearly 89.6 million acres, which compares to just under 89 million planted acres projected on March 1. The 2018 soybean acreage still trails the record U.S. soybean acreage of over 90.1 million acres in 2017. The USDA soybean acreage projection came in very near grain trade estimates, resulting in very little immediate impact on Chicago Board of Trade (CBOT) soybean prices immediately after the USDA Report was released.
Minnesota soybean acreage for 2018 is estimated at 7.8 million acres, which is a decline of 100,000 acres from the March 1st acreage projection, and compares to 8.15 million acres of soybeans planted in 2017. Iowa is projected to plant 9.9 million acres of soybeans this year, representing an increase of 100,000 acres from the March estimate, and compares to 10 million acres in 2017. Illinois showed an increase of 300,000 soybean acres, compared to March 1st estimates, while Indiana, South Dakota, and Wisconsin also showed increases of 100,000 in soybean acreage in the June 29th Report. North Dakota had the biggest reduction in soybean acreage from the March planting estimates at 500,000 acres, while Nebraska also indicated a reduction of 100,000 planted soybean acres from the earlier estimate.
Even though 2018 planted corn acres in the U.S. are expected to trail total U.S. soybean acreage, the corn acreage estimate in the June 29th USDA Report came in about 1.1 million acres above the projected U.S. corn acreage on March 1. The latest report listed U.S. planted corn acres in 2018 at just over 89.1 million acres, which is a decrease of over 1 million acres from the 2017 planted corn acres. The 2018 U.S. estimated corn acreage compares to just under 90.2 million acres in 2017, 94 million acres in 2016, 88 million acres in 2015, 90.6 million acres in 2014, and 95.4 million acres in 2013.
Based on the June 29th USDA Report, Minnesota planted an estimated 7.8 million acres of corn in 2018, which is a decline of 3 percent from just over 8 million acres of corn planted in 2017. Minnesota’s projected corn acreage increased by 300,000 acres from the March 1 planting intentions. Other States that showed major increases in planted corn acres , compared to March 1st estimates, were Nebraska with an increase of 400,000 acres and North Dakota with an increase of 300,000 acres. Iowa is projected to plant 13.3 million acres of corn in 2018, which is the same as the 2017 corn acreage, and is the same as the March estimate. Other States that were unchanged from the March 1st corn acreage projection were Illinois and Indiana. South Dakota was the only State to show a major decline in corn acreage, compared to March 1st estimates, with a drop of 500,000 planted acres.
The June 29th USDA Report pegged total 2017 U.S. wheat acreage at 47.8 million acres, which would be an increase of 1.8 million acres, compared to 2017 wheat acres. The 2018 total U.S. wheat acreage would still be the second lowest since 1919, trailing on the 2017 U.S. wheat acreage. The projected 2018 wheat acreage compares to 46 million acres in 2017, 50 million acres in 2016, and 54.6 million acres in 2015. The estimated spring wheat acreage in the latest report was an increase of 482,000 acres from the March 1st projections. 2018 spring wheat acreage in North Dakota is estimated at 7.7 million acres, which is an increase of 1 million acres from the 2017 wheat acres. Minnesota spring wheat acreage for 2018 is estimated at 1.61 million acres, which represents an increase of 38 percent from 1.17 million wheat acres in 2017.
Some areas of the Western Corn Belt struggled with delayed planting this Spring, and portions of the same region have been impacted by excessive rainfall during June and early July. Thus far, no major drought areas have developed in the primary corn and soybean producing areas of the Midwest, as we head into the critical tasseling and pollination period for corn. Many States have had very strong “good-to-excellent” crop ratings in the recent weekly USDA crop progress reports.
As of early June, USDA is projecting 2018 national average yields at 174 bushels per acre for corn and 48.5 bushels per acre for soybeans, which compares to the final U.S. average yields in 2017 of 176.6 bushels per acre for corn and 49.1 bushels per acre for soybeans. Some grain marketing analysts are wondering if the recent weather-related crop production issues in Southern Minnesota, Northern Iowa, and Eastern South Dakota will be enough to affect total U.S. corn and soybean production, and thus cause some strength in the grain markets by Fall. However, any enhancements in final U.S. corn and soybean yield estimates in the coming months could put pressure on grain prices as we head into harvest season.
Note — For additional information contact Kent Thiesse, Farm Management Analyst and Senior
Vice President, MinnStar Bank, Lake Crystal, MN. (Phone — (507) 381-7960);
E-mail — firstname.lastname@example.org)