FOCUS ON AG
April 4, 2022
USDA ISSUES A SUPRISING PLANTING INTENTIONS REPORT
The USDA “Prospective Plantings Report” that was released on March 31 indicated a record amount of U.S. soybean acres for 2022, as well as a much lower than expected level of planted corn acreage for the coming year. If the USDA planting intentions numbers hold, 2022 would mark only the second time in the past thirteen years (2010-2022) that planted soybean acreage in the U.S. has exceeded planted corn acreage, with the other year that this occurred being 2018.
The USDA prospective planting acreage is based on survey data collected from producers in early March. The very surprising USDA estimates for intended 2022 U.S. corn and soybean acreage was viewed as rather “bullish” for “new crop” corn futures prices and somewhat ‘bearish for soybean futures prices on the Chicago Board of Trade (CBOT). After the USDA plating intentions report was released March 31, December 2022 corn futures closed up 27 cents per bushel and November soybean futures closed down 49 cents per bushel. The USDA “Quarterly Grain Stocks Report” was also released on March 31, which lists the estimated U.S. grain inventory as of March 1, 2022, for both “on-farm” and commercial grain storage.
Typically, these late March USDA Reports are very critical to farm operators and grain traders due to their impact on grain market prices in the Spring and early Summer months. During these months, many farm operators try to sell remaining grain inventories from the previous growing season, as well as look for opportunities to forward price a portion of the anticipated crop for the current year. In a majority of years, corn and soybean prices usually reach their peak-price from April until June, which is why these reports are so important.
Following are some highlights from the March 31st USDA Reports:
Corn — The planting intentions report indicated an estimated 89.5 million acres of corn to be planted in the U.S. in 2022, which is a decrease of 3.9 million acres or 4.2 percent from the 2021 corn acreage of 93.4 million acres. The 2022 U.S. corn acreage would be the lowest since the 2018 corn acreage of 88.9 million acres. The highest corn acreage recorded in recent decades in the March USDA survey was 97.3 million acres in 2012. The USDA corn acreage estimate was about 2.5 million acres below the average grain trade estimate of near 92 million acres. Minnesota is expected plant 500,000 fewer acres of corn in 2022, which is a decrease of 7 percent from last year, while North Dakota corn acres are expected to drop by 600,000 acres or 12 percent in 2022, compared to a year earlier. The 2022 corn acreage is also expected to decrease in Iowa, Illinois, Indiana, Ohio, Nebraska, and Wisconsin. The only Midwest State projecting a small increase in corn acreage for 2022 is South Dakota.
The total U.S. corn stocks on March 1, 2022, were listed at over 7.85 billion bushels, which compares to the 7.7 billion bushels on March 1, 2021. The March 1st USDA corn stocks estimates were very close to grain trade estimates and remain quite tight compared to corn stocks levels in recent years.
Soybeans — Based on the estimates in the March 31st Planting Intentions Report, U.S. soybean acres are likely to increase significantly in 2022, as compared to the 2021 soybean acreage. The report indicated that producers expect to plant a record 91 million acres of soybeans in 2022, which would exceed the previous record U.S. soybean acreage of 90.2 million acres in 2017. The 2022 soybean acres would be up approximately 4.4 percent from the 87.2 million acres in 2021. The projected USDA soybean acreage came in about 2.2 million acres above the average grain trade estimates for 2022. If realized, the 2022 soybean acreage would be at a record level in Illinois, Nebraska, Ohio, South Dakota and Wisconsin, with significant acreage increases in Minnesota, Iowa and Indiana. The only Upper Midwest State projecting a decrease in 2022 soybean acreage is North Dakota.
Soybean stocks on March 1, 2022, were listed at just over 1.93 billion bushels, which is an increase of nearly 24 percent from 1.56 billion bushels on March 1, 2021. The total U.S. soybean usage from December, 2021 through February, 2022 was 1.22 billion bushels, which was down 12 percent from a year ago. The March 1 soybean stocks estimate came in slightly above the average estimate by grain traders, which together with the added soybean acreage estimate for 2022, is putting some short-term downward pressure on soybean market prices.
Wheat — Due to the potential impacts on worldwide wheat production that may result from the Russian invasion of Ukraine, there was considerable interest in the U.S. planting intentions for spring wheat in 2022. The intended total U.S. wheat acreage for 2022 is estimated at 47.4 million acres, which is up slightly from the 2021 wheat acreage of 46.7 million acres. The 2022 wheat acreage would be well above the total wheat acreage of 44.5 million acres in 2020, which was among the lowest in the past 100 years. Spring wheat acreage for 2022 was estimated at 11.2 million acres, which is very similar to last year. Spring wheat acres are expected to increase in Minnesota, South Dakota, and Montana but to decline in North Dakota.
Total wheat stocks on March 1, 2022, were listed at just over 1.02 billion bushels, which is down 22 percent from 1.31 billion bushels on March 1, 2021. The 2022 wheat stocks estimate was slightly below the average grain trade estimates. Wheat prices rose rapidly following the Russian invasion of Ukraine and have remained quite strong in recent weeks.
The March USDA Grain Stocks Report indicated that as of March 1, 2022, there were nearly 4.1 billion bushels of corn and 750 million bushels of soybeans stored on farms in the U.S. This represents about 52 percent of the 7.85 billion bushels of total U.S. corn stocks and 39 percent of the 1.93 billion bushels of total soybean stocks. The 2022 on-farm corn stocks are up slightly from a year ago and the March 1 soybean stocks are up 26 percent compared to 2021 levels. USDA does not survey the percentage of the bushels in on-farm storage that are forward priced for future delivery, as compared to bushels that are not priced. However, many private analysts feel that a much higher percentage of the corn and soybean bushels still in storage on March 1st may be forward priced in 2022 as compared to some previous years, due to the ongoing strength in the cash corn and soybean markets.
Current corn and soybean market prices are at the highest levels since 2013, which has offered farm operators some excellent grain marketing opportunities in the past few months. Given the ongoing tight grain stocks for corn and soybeans, along with the March 31 USDA acreage estimates, there should continue to be some strength in the near-term cash markets in the coming weeks. New crop corn and soybean prices for the Fall of 2022 are also likely to stay fairly strong in the coming weeks. However, the Fall harvest prices are likely to be quite volatile, either up or down, depending on Spring planting progress, potential drought conditions during the growing season in some portions of the Corn Belt, and future USDA supply and demand reports.
The March 31st USDA report was based on producer surveys of planting intentions, as of March 1st; however, there is potential for these planting intentions to be adjusted slightly when final planting takes place. Some factors that could lead to increases or decreases in the final U.S. corn and soybean acreage include any significant changes in the current strength of the grain markets and the potential for planting delays in some areas of the Midwest. The sharp increases in fertilizer costs for corn production in 2022 has likely been a factor in the increased acreage estimates for soybeans this year, which could be tempered somewhat depending on Spring weather patterns and changes in “new crop” corn and soybean prices in the coming weeks.
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Note — For additional information contact Kent Thiesse, Farm Management Analyst and Sr. Vice President, MinnStar Bank, Lake Crystal, MN. (Phone — (507) 381-7960) E-mail — kent.thiesse@minnstarbank.com) Web Site — http://www.minnstarbank.com/