March 31, 2023
After some technical delays, USDA’s National Agricultural Statistics Service released its 2023 Prospective Plantings findings, which reported a larger corn acreage expansion than what the markets had been expecting. Soybean acreage did not see the gains the trade had been expecting prior to the report’s release, which helped prop up prices in the soybean market. Quarterly Grain Stocks data also favored larger than expected soybean usage between December 1, 2022, and March 1, 2023, adding more bullish support to soybeans.
USDA expects corn acreage to increase 4% this year, with a new estimate of 92.0 million acres. Acreage is expected to hold steady or increase in 40 out of 48 of the estimating states. This was noticeably above the average trade guess of 90.880 million acres. Farm Futures had offered an estimate of 87.677 million acres based on a grower survey conducted earlier this spring.
“Obviously, this report differed substantially from our March 2023 Farm Futures survey estimates,” according to Farm Futures grain market analyst Jacqueline Holland. “In truth, I was a little shocked by just how far we missed the mark. But I’d be naïve to pretend like I didn’t expect it could be a possibility. Crop budgets for corn production are still very lucrative and falling nitrogen prices are helping to keep corn acres slightly more attractive than their soybean counterparts this spring.”
Next, all eyes will turn to mid-range weather forecasts to see whether U.S. farmers will actually be able to plant this much corn in 2023, Holland adds.
“Snowpack remains heavy in the Northern Plains and drought is still lingering in parts of the Upper Midwest and Central and Southern Plains,” she notes. “A late start due to weather could drive more acreage in to prevent plant and would likely favor a last-minute shift to soybeans.”
Soybean plantings are expecting a slight year-over-year increase of 87.5 million acres. Acres are estimated to hold steady or increase in 15 out of the 29 estimating states. Analysts were not anticipating this move after submitting an average trade guess of 88.242 million acres ahead of the report.
“There has also been a lot of buildup about renewable diesel since the start of the year,” Holland points out. “But I think the modest soybean expansion is the market’s way of reminding growers that until the plants are operational, soybean prices aren’t going to trade on hope alone.”
Another thing worth considering is the rapid rise in soft red winter wheat acreage, Holland continues.
“Improved crop insurance offerings and favorable prices during last fall’s sowing could result in more double-crop soybeans to be planted in the coming months,” she says. “There does not currently exist a reliable method to measuring double-crop soybean acres, so this could cause more price volatility down the road.”
All-wheat acres should increase by 9% this year, meantime, with 49.9 million acres. Of the total, winter wheat acres should come in at 37.5 million acres, plus another 10.6 million acres of spring wheat and 1.78 million acres of durum.
“The market seems skeptical of USDA’s reported rise in winter wheat acres, especially considering how worrisome crop ratings on the Plains have been reported over the past week,” Holland says. “Based on lower soft red winter wheat prices in Chicago and rising Kansas City hard red winter wheat futures, the market likely believes that higher SRW acreage will overpower any expected losses for HRW in the coming months.”
Holland adds that only 19% of top wheat producer Kansas’ winter wheat crop is in good to excellent condition, with 52% of its crop remaining in poor to very poor ratings as of March 26.
“At that same time, 42% of Nebraska’s winter wheat crop was rated in poor to very poor condition while only 22% of its crop was reported in good to excellent condition,” she says. “Both states continue to battle exceptional drought conditions.”
Cotton acres are expected to shift 18% lower this year, with 11.3 million total acres. Upland cotton represents the bulk of that total (11.1 million acres), with an additional 154,000 acres of American Pima.
USDA’s Prospective Plantings report was not the agency’s only release today. The latest quarterly grains stocks data also arrived this morning.
Corn stocks were modestly below year-ago totals of 7.758 billion bushels, easing to 7.401 billion bushels through March 1. That was also slightly below the average analyst estimate of 7.470 billion bushels.
Soybean stocks were also lower than expected, moving from 1.932 billion bushels a year ago down to 1.685 billion bushels. That was moderately below the average trade guess of 1.742 billion bushels.
Wheat stocks were higher than the average trade guess, in contrast, with 946 million bushels through March 1. That was nonetheless below year-ago totals of 1.029 billion bushels.
“Usage rates for soybeans came in unexpectedly high for the December 1, 2022 – March 1, 2023 reporting period,” Holland says. “It left March 1 U.S. soybean stocks a staggering 13% lower than the same time a year ago, reflecting last summer’s crop shortfalls and continued rapid usage – especially an unexpected late season surge in Chinese soybean purchases following Brazil’s weather delays.”
Corn stocks came in right on the mark, in line with pre-report analyst expectations, Holland adds. But the initial bearish price pressure was capped by the fact that domestic (and global) corn supplies still remain tight, she says. March 1 corn stocks were nearly 5% lower than the same time a year ago, which is a direct function of a smaller 2022 crop.
“Two years of crop shortfalls continue to keep U.S. wheat stocks tight, as March 1 inventories fell 8% lower than the same time last year,” she says. “Third quarter usage rates were high (366M bu.), but not quite as high as what the trade had been hoping to see. Wheat prices seem to be deriving more of their price action from expectations for the upcoming year’s crop production in the aftermath of today’s reports.”
Bonus: Holland on hay
“I know hay acreage typically isn’t the sexiest topic to highlight in the annual acreage report, but it is important. As land expansion in the U.S. has largely hit its limit, in direct contrast to expansion trends currently underway in Brazil, Ukraine (well, until this past year anyways), and Russia, hay acres have become something of a residual category, giving and absorbing the extra crop ground as the market requires.”
“I couldn’t derive reliable hay acreage estimates from our March 2023 Farm Futures survey but based on our farmer data I was not at all surprised that USDA is expecting a 2% increase in hay acres this year, with harvested acreage projected to reach 50.6 million acres in 2023.”
“This was not surprising to me because hay stocks are currently at some of the lowest levels we’ve seen in this country since the 1950s. What surprised me more was where the hay expansion is taking place – in the South. Top hay producer Texas reported a 15% increase in 2023 hay acreage, which will likely take the place of some cotton acres in the Lonestar State.”
Correction: An earlier version of this story incorrectly referenced acreage figures from an earlier report. This version is updated to reflect USDA's 2023 numbers.
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