As farmers gear up for 2023 harvest season, next year’s crop will likely be high on their minds. A Farm Futures August 2023 survey finds that growers are already thinking about strategies to be financially successful in the upcoming year and the results will have important implications for markets.

The Farm Futures survey, which garnered 985 farmer responses via email July 15 – August 1, found that farmers expect to plant 93.1 million acres of corn in 2024, down 1% from this year’s acreage. Shrinking revenue prospects amid relatively high costs will likely tighten profit margins for the 2024 crop, giving alternative crops more opportunity for acreage next spring.

Soybeans are one such crop farmers expect to expand in 2024. Surveyed farmers indicated a 2% increase in soybean acreage next spring to 85.4 million acres. Wheat acres are also expected to expand, with winter wheat acres forecasted 5% higher at 38.7 million acres and spring wheat acres rising 8% to 52.7 million acres. It would be the largest wheat acreage planted since 2015.

Smaller corn acreage

If Farm Futures readers’ corn acreage expectations prove true, even though a smaller corn acreage will be planted, next year’s corn crop could still be the largest on record if weather patterns allow for a return to trendline yields. After several consecutive years of crop shortfalls and production challenges, the extra supplies could help revive liquidity in the corn demand pipeline.

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That prospect is bearish for prices, as the large crop could flood the market and reduce the scarcity factor for U.S. corn in the upcoming year. Domestic corn usage rates have been pared back significantly in 2022/23 to account for smaller crops, but waning export demand and a shrinking cattle herd pose significant risks to corn usage prospects in the next 12 months.

As a result, the 2024/25 stocks-to-use ratio for corn will balloon to 18.7%, making it the biggest corn ending stock volume the U.S. has experienced since the 2004/05 marketing year.

Larger soybean acreage

The Farm Futures farmer survey found that soybean acres could rise to the fifth largest acreage on record if the forecast of 85.4 million acres is planted next spring. If yields return to trendline patterns, farmers could harvest the country’s fourth largest soybean crop in a year’s time.

Soybean usage prospects don’t face as many bearish challenges as their corn counterparts. The U.S. Environmental Protection Agency will mandate 3.04 billion gallons of renewable diesel production in the upcoming year, which will be fed by new and expanding facilities in the Upper Midwest. Crush volumes are forecasted nearly 2% higher next year as more crush capacity comes online, with more facilities likely to come online in the following year.

While USDA’s baseline forecasts published last February call for slightly smaller 2023/24 soybean export volumes, a larger crop could help to increase those shipments and keep U.S. pricing comparable with South America. But the export market will increasingly have to compete against domestic processors for available supplies, as well as robust South American production prospects.

Soybean ending stocks will increase in 2024/25 if favorable weather conditions allow. But a forecasted stocks-to-use ratio of 9.1% - while still tight – will be the most liquidity the soybean demand pipeline has enjoyed since the end of the Trade War in 2019/20.

A segmented wheat expansion

If Farm Futures farmers’ intentions are realized, it is likely that wheat acreage expansion will be a segmented phenomenon and will depend heavily on weather conditions across the U.S. Plains. Even with a bigger winter wheat acreage expected, it will still be the ninth smallest winter wheat area sown.

Hard red winter wheat stocks are slated to end the current 2023/24 marketing year at 246 million bushels, as high prices and crop shortfalls have pushed many buyers out of that market. The past two marketing years have seen HRW stocks reach their tightest levels since 2013/14.

Similarly, another dry growing season along the Canadian border means that 2023/24 white wheat stocks are going to be pinched to their tightest level since China went on a white wheat buying spree during the 2020 pandemic. Plus, that same heat stress to current spring wheat crops in the northern U.S. could also keep supplies tight and acreage competitive in 2024.

If 2024 U.S. wheat acres are to expand, it will likely be a very segmented expansion. Barring any significant changes in Southern Hemisphere production, hard red winter and white wheat acres will continue to compete against alternative crop rotations in the Plains and Pacific Northwest this fall. Soft red winter wheat acres in the east will need catastrophic news from the Black Sea to remain price competitive in 2024 after a bumper harvest this summer.

Other survey findings

Overall sentiment for on-farm profitability is still positive, but perhaps not as optimistic as a year ago. The August 2023 Farm Futures Survey found that 33% of respondents are worried about their ability to pay back debts, compared to only 26% in the same survey last year.

About 77% of producers expect this year’s profits will be lower than last year, a figure that only stood at 69% a year ago. Higher input costs (60%) and lower commodity prices (55%) are likely the key culprits behind that sentiment, though these factors did not rank near as high on farmers’ minds in this year’s survey than last.

A lot of that sentiment is likely because yield losses are more widespread this year than last. Grain prices have also taken a dive lower this summer, though they were on the uptick the same time a year ago. After a few years of comfortable profit margins, many growers are being faced with making more conservative management decisions as bearish market headwinds approach.

Farmers are likely keeping similar marketing strategies in their back pocket for selling their 2023/24 crops. Through the end of the 2023 calendar year, growers expect to have sold 57% of the 2023 corn crop, 64% of the 2023 soybean crop, and 88% of 2023 wheat. Those figures are all within a percentage point of year-ago strategies.

Slightly more growers are going to chance the markets going higher later in the marketing year, opting to store crops unpriced after harvest instead of selling off the combine or pre-booking sales ahead of harvest. This suggests that farmers are willing to take on more price risk in hopes of higher prices following harvest activities.