Farm Progress

5% Drop In U.S. Corn Acreage?

CSD Staff 1

April 4, 2006

2 Min Read

USDA's Prospective Plantings report shows farmers across the nation plan to slash corn acreage by 3.74 million acres, or 5%, compared to 2005. The report cites "the high cost of fuel and fertilizer" as the cause for the switch from corn to "less input-intensive crops such as soybeans." The report also shows farmers plan to increase U.S. soybean acreage 7% in 2006 compared to 2005.

"The sheer magnitude of the switch is a bit surprising," says Darrel Good, University of Illinois Extension economist. "The intentions show a uniform decline in corn acreage, except that the corn acreage in Minnesota isn't going down and the corn acreage in North Dakota is going up. They're the only two significant corn-growing states that are bucking the trend. The biggest declines are in the Eastern Corn Belt."

The National Agricultural Statistics Service (NASS) released the Prospective Plantings report on Friday, March 31. The report has already had an immediate affect on prices.

"November beans closed down 12 ¾ cents/bu. and corn was up 8 cents/bu. on Friday," notes Good. "This single-day change alone alters the relative gross income by about $20/acre in favor of corn production. So, it looks like the market will try to encourage producers to plant more corn acres than what they had intended."

The important question now is how much more will corn and soybean prices change prior to planting? "If we had trend-line corn yields in 2006, the planting intentions for corn would result in a 10.6 billion-bu. crop," says Good. "However, the market could easily expand to 11.5 billion bu. next year, which is a significant tightening of corn stocks with big price-jump potential."

If the intentions are realized in 2006, U.S. soybean acreage would reach a record-high 76.9 million acres, and corn acres would drop to 78 million acres. "For soybeans, the intentions show a uniform increase, except in the southeast (AL, GA, LA), where intentions are to reduce soybean acreage slightly in favor of more soft red wheat and cotton," says Good. "The overall lack of intentions to expand spring wheat acreage is also surprising, given the recent rally in prices for wheat."

The largest increase in soybean planting intentions is in North Dakota, which shows "a 41% jump to a record-high 4.14 million acres," according to NASS. "Significant growth in soybean acreage is also expected across the Corn Belt, including Illinois, with a 6% increase to 10.1 million acres, and Indiana, with a 9% jump to 5.9 million acres."

To view the entire report, log onto the NASS Web site at:

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